J  A 

^ 

A 

o 

CO 

o 

0 

c 
i 

0 

s 

z 

0 

30 

o 

O 

■aP  MOii£llr> 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


y^-" 


J 

/  I 

/  / 


^^ 


^~ 


U 


A    TREATISE 


ON  THE 


LAW  OF  INSURANCE 

FIRE,  LIFE,  ACCIDENT,  MARINE 

With  a  Selection  of  Lp^adino  Illustrative  Cases 

AND 
AK   APPENDIX    OF   STATUTES  AND    FORMS 


BT 


GEORGE    RICHARDS 

0?    THE    NEW    YORK    BAB    AND    J^ECTUHER    ON    INSURANCE    UiW 
IN  THE  SCHOOL  OF  LAW  OF  COLUMBIA   COLLEGE 


SECOND  H^niTlON. 


THE  BANKS  LAW  PUBLISHING  COMPANY, 

21  Murray  Street, 

NEW  YORK. 

1 90() 


T 


COPYrviUriT.   1892, 

Sr  GEORGE   RTCHARXte 

Copyright,  1892. 
»V  GEORGE  RICHARm 


V) 


PREFACE 

This  book  was  designed  primarily  for  the  class-room,  and  is 
the  result  of  an  effort  to  combine  the  advantages  of  the  two 
more  prominent  methods  in  use  for  teaching  law,  commonly 
known  as  the  text-book  and  case  systems,  the  comparative  merits 
of  which  have  recently  aroused  wide-spread  and  thoughtful 
attention. 

The  appearance  of  Langdell's  Select  Cases  as  a  substitute  for 
Parsons  on  Contracts,  at  Harvard  Law  School,  in  the  year  1871, 
dnd  the  subsequent  abolition  of  text-books  from  their  curriculum 
by  the  law  faculty  of  that  great  university,  marked  a  conspic- 
uous departure  from  pre-existing  methods  of  legal  instruction, 
and  gave  impetus  to  an  exchange  of  views  among  those  interested 
in  education  which  has  continued  with  increased  earnestness. 

By  the  old  method,  the  student  is  expected  to  acquire  a 
knowledge  of  the  elements  of  the  law  by  memorizing  the  pages 
of  a  general  treatise,  which,  in  the  estimate  and  according  to 
the  views  of  its  author,  contains  a  compendium  of  the  whole 
body  of  law  upon  the  given  subject.  By  the  other  method,  the 
student  is  made  acquainted  with  original  sources  of  legal  au- 
thority ;  namely,  leading  decisions  and  opinions  by  the  courts 
upon  the  given  subject,  together  with  the  precise  statement  of 
facts  upon  which  the  opinion  in  each  case  is  based,  substantially 
as  recorded  in  the  official  reports. 

These  selected  cases,  edited,  arranged,  and  printed  in  a  book 
for  this  purpose,  are  put  into  the  hands  of  the  class,  and  are 
made  the  subject  not  only  of  study  and  recitation,  but  also  of  a 
free  discussion  in  the  class-room  under  guidance  of  an  instructor, 
with  a  view  to  evolving,  illustrating,  and  emphasizing  the  im- 
portant principles  established  by  them,  and  also  other  analogous 
and  closely  allied  principles  which  may  at  the  same  time  be 
conveniently  considered. 

The  former  method  gives  a  synopsis  or  brief  outline  of  many 


iv  FSEFAOE. 

cases  ;  the  latter  sets  forth  with  exact  detail  a  few  selected  cases 
upon  leading  points  illustrative  of  essential  principles.  The 
former  method  is  more  synthetic  and  abstract,  the  latter  more 
inductive  and  concrete.  The  former  is  more  theoretical,  and, 
in  a  sense,  more  scientific ;  the  latter,  while  embracing  a 
narrower  range  of  decisions,  is,  with  respect  to  the  particular 
adjudications  and  principles  which  it  includes,  more  definite, 
practical,  and  thorough.  Each  of  these  methods,  no  doubt, 
possesses  points  of  superiority  over  the  other ;  and  either  is, 
in  my  judgment,  for  purposes  of  giving  instruction  in  most 
branches  of  jurisprudence  and  for  the  average  American  stu- 
dent  at  law,  immeasurably  preferable  to  a  lecture  system. 

A  scientific  presentation  of  a  subject  in  its  entirety,  by  a 
competent  master,  must  be  of  value  to  a  student.  "Within  the 
b.*oad  scope  of  a  general  treatise,  principles  can  be  concisely 
defined  and  conveniently  arranged,  not  only  for  purposes  of 
study  in  the  first  instance,  but  also  for  subsequent  reference 
and  review ;  the  relations  of  different  cases  to  one  another  can 
be  explained,  decisions  seemingly  inconsistent  can  be  harmon- 
ized, historical  developments  can  be  briefly  but  adequately 
summed  up,  and  many  particulars  and  distinctions  of  greater 
or  less  importance,  which  could  not  possibly  be  touched  upon 
within  the  bounds  of  any  selection  of  isolated  cases,  can  be 
enumerated  or  brought  within  the  reach  of  general  rules. 

For  example,  within  pages  133  to  196,  inclusive,  of  this  vol- 
ume, the  meaning  and  legal  efl'ect  of  every  clause  of  the  New 
York  standard  fire  policy  are  considered  with  some  degree  of 
comprehensiveness,  together  with  numerous  citations  of  authori- 
ties. Little  of  this  matter  probably  could  be  omitted  to  ad- 
vantage ;  and  yet,  to  enforce  or  illustrate  all  the  propositions 
of  the  text  contained  in  these  sixty-four  pages  with  actual  cases 
reported  in  full  would  increase  the  length  of  the  work  to  sev- 
eral volumes,  making  it  altogether  too  bulky  and  expensive  to 
meet  the  more  immediate  aim  of  the  book. 

If,  then,  the  student's  memory  were  absolutely  infallible,  and 
if  extent  and  variet}'^  of  legal  formulas  were  the  only  desidera- 
tum, and  provided  the  general  treatise  were  a  sufficiently  good 
one,  the  text-book  system  might  well  claim  to  be  without  a 
rival ;  and,  as  it  is,  it  oflfers,  I  think,  characteristic  advantages 
which  nothing  else  can  supersede. 


Preface.  v 

But,  on  the  other  hand,  it  is  to  be  observed,  in  the  first 
place,  that  a  good  text-book  upon  a  given  subject  is  not  always 
available,  and  especially  is  this  apt  to  be  the  case  if  the  branch 
of  law  to  be  considered — like  insurance  law,  for  instance — is 
one  which  is  in  process  of  rapid  development.  Owing  to  the 
large  number  of  independent  tribunals  in  the  different  States, 
and  the  enormous  multiplication  of  reported  cases,  involving 
decisions  more  or  less  inharmonious  with  one  another,  it  is  a 
harder  task  to  write  a  scientific  treatise  upon  a  general  branch 
of  American  jurisprudence  than  it  used  to  be  in  former  years, 
when,  with  a  limited  field  to  traverse,  the  learned  juridical 
author  led  rather  than  followed  the  courts.  Accordingly,  as  is 
well  known,  the  cautious  practitioner  of  modern  times  uses  his 
text-book  as  an  index  or  digest  of  cases  and  subjects,  rather  than 
as  a  safe  and  final  exposition  of  the  law,  and  is  seldom  satisfied 
without  supplementing  its  perusal  with  a  resort  to  the  more  relia- 
ble sources  of  authority  to  be  found  in  the  reports  themselves. 

But,  in  the  second  place,  the  solution  of  the  question  of  ways 
and  means  how  most  effectively  to  inculcate  legal  principles 
may  not  turn  altogether  upon  the  excellence  of  the  text-book 
that  happens  to  offer  itself  for  use  ;  since  at  best  a  text- book  is 
only  a  reflection  from  the  law,  and  not  the  law  itself.  It  is, 
for  the  most  part,  as  has  been  remarked,  nothing  but  a  collec- 
tion of  actual  decisions  from  manv  cases.  Here  the  abridg- 
ment is  not  in  the  number  of  cases,  but  in  the  form  and  sub- 
stance of  every  one ;  and  in  order  to  bring  the  reports  of  all 
the  adjudications  cited  in  the  text  within  the  compass  of  a  vol- 
ume, each  case  must  be  condensed  to  a  point  almost  beyond 
recognition.  Its  title  and  individuality  must  be  sacrificed. 
The  exact  and  concise  statement  of  material  facts,  prepared 
with  all  the  experience  and  skill  of  the  official  reporter,  without 
a  careful  examination  of  which  no  judge  or  lawyer  would  ven- 
ture to  estimate  or  pass  upon  the  validity  or  significance  of  the 
decision,  must  be  seriously  curtailed  or  altogether  dropped,  for 
lack  of  room.  For  the  same  reason  the  opinion  of  the  court, 
although  it  may  be  a  monument  of  legal  learning  and  profound 
thought,  and  may  offer  a  most  concise  model  of  sound  and  con- 
vincing logic,  and  although  presumably  it  was  deemed  neces- 
sary for  the  elucidation  of  the  decision  or  else  it  would  not 
have  been  written,  must  likewise  be  omitted. 


vi  Preface. 

In  place  of  the  statement  of  facts  and  the  course  of  reason- 
ing by  which  the  conclusion  of  the  court  is  explained  and  sup- 
ported, the  author  of  the  text-book  puts  into  a  few  words  of 
his  own  what  he  considers  to  be  the  pith  and  point  of  the 
case;  and  this  is  all  that  is  furnished  to  the  student  for  his 
edification  and  instruction.  Indeed,  without  a  proper  book  of 
selected  cases  this  is  all  that  the  instructor  can  furnish  to  his 
class,  for  it  would  be  fruitless  to  refer  them  to  a  reported  case 
without  supplying  copies  of  it,  and  without  making  it  the 
subject  of  examination  and  discussion  in  the  recitation  room, 
since  it  is  evident  that  a  large  class  cannot  all  gain  access  to 
the  same  volume  in  the  library  on  the  same  day,  and  experi- 
ence proves  that  they  would  seldom  have  the  inclination  to 
do  so  if  they  could. 

One  difficulty  with  these  summarized  transcripts  from  ad- 
judicated cases,  as  they  appear  in  the  text-book,  is  that  they 
must  be  more  or  less  inaccurate  as  compared  with  the  originals 
from  which  they  are  taken  ;  another  conspicuous  disadvantage 
inherent  in  them  is  that  their  meaning  is  frequently  obscured 
by  the  mutilation  which  they  have  undergone,  and  especially  to 
the  apprehension  of  a  student,  for  the  reason  that  their  abbre- 
viated form  presupposes  a  much  greater  knowledge  of  the  sul> 
ject  than  the  ordinary  reader  possesses  ;  and  a  third  cause  for 
unfavorable  criticism  is  their  abstract  character  as  compared 
with  complete  reports.  An  actual,  well-established,  never- 
changing  case,  the  full  details  of  which  have  been  made  familiar 
by  private  study  and  open  discussion,  appeals  to  the  imagina- 
tion and  fastens  itself  upon  the  memory ;  but  an  abstract 
generalization,  read  from  the  pages  of  some  particular  edition 
of  a  text-book  and  recited  by  rote,  produces  an  impression  of 
uncertainty  and  dissatisfaction,  and  quickly  fades  out  of  remem- 
brance. The  student  who  has  chained  all  his  knowledo^e  of  law 
from  a  perusal  of  general  treatises,  when  he  is  subsequently  con- 
fronted by  practical  problems  in  the  course  of  his  professional 
career,  will  often  have  a  vague  recollection  that  he  has  read  or 
heard  something  or  other  upon  the  subject  presented  for  his 
determination,  but  what  the  point  of  the  decision  was,  or  which 
way  it  went,  or  where  it  is  to  be  found,  he  is  unable  to  remember. 

What  he  wants  to  acquire  from  his  two  or  three  years  irv 
the  law  school  is  a  legal  training  of  practical  utility,  and  no 


Frefaoe.  vi\ 

course  of  study  is  satisfactory  that  does  not  meet  that  require- 
ment ;  for  the  practice  of  the  law  is  an  art  as  well  as  a  science, 
and  its  success  depentls  not  merely  on  a  knowledge  of  rules, 
but  still  more  on  the  ability  to  apply  them  to  actual  and  ever- 
varying  problems  of  fact.  No  system  of  legal  instruction  can 
be  pronounced  perfect  that  allows  a  student  to  wait  until  after 
graduation  before  being  required  to  read  any  insurance  cases, 
or  to  see  the  form  of  an  insurance  policy,  or  the  written  appli- 
cation for  a  policy,  or  the  proofs  of  loss  ;  and  yet,  a  few  years 
ago,  that  was  precisely  the  experience  of  many  if  not  most  of 
our  law  students,  although  insurance  was  made  one  of  the  re- 
quired subjects  of  study  in  every  course  upon  contracts. 

There  are  two  things,  all  will  agree,  in  regard  to  which 
a  law-student  ought  to  make  himself  an  adept  before  he  can 
hope  to  become  a  successful  practitioner — he  must  be  able, 
upon  a  given  statement  of  facts,  to  reach  a  correct  legal  con- 
clusion, or  else  he  cannot  give  good  advice  to  his  clients  ;  and 
he  must  also  be  able  to  follow  out  a  sound  and  logical  course 
of  reasoning  to  its  legitimate  result,  or  else  he  cannot  win  their 
cause  before  court  or  jury.  From  all  this  the  inquiry  arises 
whether  in  trying  to  teach  these  two  lessons  we  can  afford  to 
discard  altogether  the  leading  cases  of  our  great  judges,  which 
constitute  the  original  and  final  standards  of  legal  authority. 

Those  of  us  who  have  had  hereditary  or  long-standing  pre- 
possessions in  favor  of  the  old  and  time-honored  methods  of 
teaching  law,  and  who  are  indiined  to  defend  them  against  a 
new-comer  "with  feelings  of  just  gratitude  and  loyalty,  must  face 
the  question  fairly,  whether,  with  all  their  merits,  they  are  not 
susceptible  of  some  improvement,  and  whether  the  wisest 
course  to  adopt  is  not  a  resultant  of  the  advantages  of  both  the 
systems  which  I  have  thus  attempted  to  compare  and  contrast. 
The  actual  combinations  of  fact  are  so  multifarious,  legal  dis- 
tinctions are  so  arbitrary,  often  having  a  historical  rather  than 
a  scientific  basis,  that  it  surely  nmst  be  more  profitable  for  the 
student  to  limit  his  attention  at  first  to  fundamental  and  far- 
reaching  principles,  taking  time  to  make  these  intelligible  and 
familiar  by  working  them  out  in  a  realistic  way  from  the  great 
masterpieces  of  forensic  logic  and  learning  given  by  illustrious 
judges  in  the  performance  of  their  professional  duty,  rather  than 
to  seek  a  wider  and  more  indefinite  survey  of  the  entire  field 


viii  Preface. 

of  the  subject  as  mapped  out  by  an  individual  and  irresponsible 

author,  of  which  at  best  only  a  faint  impression  can  be  per- 
manently retained  in  the  memory. 

Finally,  it  may  be  objected,  that  to  devote  attention  to  an 
examination  and  discussion  of  actual  cases  will  induce  the  stu- 
dent to  pin  his  faith  to  isolated  decisions  rather  than  to  rely 
upon  general  principles,  and  will  encourage  in  him  a  habit  of 
superficial  disputation  at  the  expense  of  hard  study.  However 
forcible  this  objection  might  be  if  directed  against  the  exclu- 
sive use  of  the  case  system,  it  offers  no  adequate  reason  for 
neglecting  to  take  advantage  of  the  undeniable  assistance  to  be 
derived  from  a  collection  of  well-selected  cases  with  which  to 
illustrate  the  more  general  propositions  of  the  text-book.  And 
the  great  weight  of  testimony  from  those  who  have  tried  the 
experiment  certainly  favors  the  further  use  of  selected  cases  for 
purposes  of  debate  in  the  class-room.  The  collision  of  mind 
with  mind  among  the  students  who  take  an  active  part  in  the 
argument  is  stimulating  and  instructive ;  and  the  free  and  open 
discussion  of  principles,  based  upon  definite  statements  of  fact, 
brings  the  teacher  into  more  vital  and  influential  relations  with 
his  class,  and  affords  him  the  better  opportunity  to  discover 
and  correct  their  difficulties  and  mistakes. 

With  respect  to  the  law  of  insurance,  the  more  recent 
American  text-books  are,  for  the  most  part,  elaborate  digests 
of  decisions,  altogether  too  voluminous  for  the  class-room. 
Moreover,  much  of  their  space  is  given  up  to  a  consideration 
of  phraseology  which  does  not  appear  in  the  later  forms  of 
policies,  and  consequently  is  more  or  less  obsolete  ;  and  no  one 
of  them  treats  specifically  of  the  New  York  standard  fire 
policy,  which  is  now  used  exclusively  within  this  State,  and  has 
been  substantially  adopted  by  several  other  of  the  largest  States. 
English  text-books  on  this  subject,  such  as  Porter  and  Bunyon, 
relate  principally  to  English  forms  of  policies  and  English 
statutes  and  decisions,  which  differ  in  important  particulars 
from  our  own ;  while  no  one  of  the  books  named  treats  of 
marine  insurance,  although  in  it,  as  the  oldest  branch,  the  first 
principles  of  insurance  law  were  established. 

Having  lately  accepted  an  invitation  from  the  Faculty  of 
the  Columbia  Law  School  to  deliver  a  course  of  lectures  upon 
the  law  of  insurance  generally,  including  fire,  life,  accident,  and 


Preface.  ix 

marine,  I  find  myself  reluctantly  compelled  to  prepare  and  print 
a  book  which  can  with  propriety  and  convenience  be  put  into 
the  hands  of  the  class.  In  the  arrangement  of  its  contents, 
after  tracing  the  nature  of  insurance  and  the  origin  and  growth 
of  insurance  and  insurance  law,  I  have  adopted  the  method  of 
considering,  first,  general  principles  of  insurance  law  by  them- 
selves, apart  from  the  terms  of  the  policies,  and  then  the  provis- 
ions of  the  policies  clause  by  clause,  following  the  phraseology 
and  the  order  in  which  they  occur  in  the  several  instruments. 
This,  I  think,  is  the  most  practical  and  convenient  method, 
both  for  students  and  practitioners,  and  is  one  which  the  adop- 
tion of  a  standard  form  of  fire  policy  has  made  quite  feasible. 

The  leading  cases  composing  Part  Second  have  been  care- 
fully selected  from  the  English  and  American  reports,  and  are 
illustrative  of  the  corresponding  chapters  of  Part  First,  in  con- 
nection with  which  they  should  be  studied  and  discussed. 

In  the  Appendix  will  be  found  classified  lists  of  references 
to  the  numerous  statutes  of  American  legislatures  relating  to 
the  insurance  contract,  with  a  specimen  of  each  class.  These 
lists  liave  been  made  up  from  the  original  statutes  of  all  the 
States,  and  are  now,  for  the  first  time,  presented  in  a  text-book 
on  insurance  law. 

GEORGE   RICHARDS. 
62  Wall  Street, 
^   Mardi,  1882. 


TABLE   OF    CONTENTS. 
PART  FIRST} 

CHAPTER  I. 

9AQK 

Natukb,  ORiom,  AND  Growth  of  Insukance. 

§    1.  Nature  and  Importance  of  Insurance. ...   1 

§    2.  Conditions  Necessary  to  a  Successful  System 2 

§    3.  Insurance  Companies 8 

§    4.  Statutory  Safeguards 4 

§    5.  Origin  of  Insurance  and  Insurance  Law 5 

§    6.  Lloyd's  and  Lloyd's  Usages 8 

§    7.  Largest  American  Marine  Company 11 

§    8.  Fire  Insurance 11 

§    9.  Life  Insurance 12 

§  10.  Real  Estate  Title  Insurance 14 

§  11.  Classification  of  Risks    ...   14 

§  13.  Mortuary  Tables 16 

§  13.   Reserve 17 

§  14.  Different  Kinds  of  Policies 18 

§  15.   Reinsurance    20 

§  16.  Authority  of  Insurance  Agents  to  Bind  the  Companies. ...  20 

§  17.  Agents  of  Life  Companies 21 

§  18.  Agents  of  Fire  Companies , 24 

§  19.  Agents  of  Marine  Companies , , 26 

CHAPTER  IL 
Nature  of  the  Contract. 

§  20.  Doctrine  of  Indemnity 27 

^  21.  Insurance  does  not  always  Grant  Full  Indemnity 28 

§  22.  Grants  Indemnity  for  Results  of  Negligence 29 

§  23.  Rule  of  Indemnity   Qualified  in  Marine  :  Insured  a  Co- 
insurer  ....      30 

§  24.  Double  Insurance  Contribution 31 

§  25.  Doctrine  of  Subrogation    81 

§  26.  Insurable  Interest :  Fire 33 

§  27.  Insurable  Interest  :  Life  36 

>  The  Leading  Cases  of  Part  Second  are  Illustrative  of  the  con-eepondins:  cliapters  of  Part 
First. 


xji  Table  of  Contents. 

PASS 

g  28.  Insurable  Interest  :  Marine 37 

§  29.  The  Payee  or  Assignee  of  Life  Policy  need  not  have  Insur- 
able Interest 38 

§  80.  When  must  Insurable  Interest  Exist 38 

§  81.  Temporary  Suspension  does  not  Avoid  unless  Policy  so 

Provides 39 

§  82.  Insurable    Interest  as  Related  to  Measure  of   Recovery : 

Fire  and  Marine 39 

g  83.  Insurance  Contract  is  Personal,  and  does  not  Run  with  the 

Property 42 

§  84.  Insurance  Contract  is  an  Entirety    42 

§  85.  Assignment  of  Policies 42 

§  86.  Vested  Interests  :  Life  Insurance 43 

t^  87.  Relations  between  Insurer  and  Insured  :  Life 45 

§  88.  The  Contract  is  a  Property  Right  :  Life 46 

CHAPTER  III. 

CONBUMUATION  AND   CONSTRUCTION   OF   THE   CONTRACT. 

§  89.  Requisites  of  a  Complete  Contract 47 

§  40.  The  Particulars  are  soraetiraes  Understood .  48 

§  41 .  ( "ontract  may  be  Closed  by  Parol    49 

§  42.  Contract  to  Issue  Policy  is  Governed  by  Terms  of  Usual 

Policy 49 

g  43.  Certain  Rules  of  Construction 50 

§  44.  What  Law  Governs  the  Construction  of  the  Contract 54 

§  45.  Who  Construes  the  Contract,  Court  or  Jury 54 

CHAPTER   IV. 

ftKPBKSENTATIONS  AND  CONCEALMENTS. 

§  46.  Concealment  :  Marine  Insurance 58 

§  47.  Concealment :  Fire  and  Life 57 

g  48.  Representations 59 

§  49.  Erroneous  Statement  of  Opinion  not  generally  Fatal 60 

§60.  Test  of  Materiality 61 

g61.  Refers  to  what  Time 61 

CHAPTER  V. 

Warranties. 

I  52.  What  is  a  Warranty C3 

§  53.  Warranty  must  be  Strictly  Performed 62 

§  54.  Inability  to  Perform  the  Contract  no  Excuse 64 

§  55.  Papers  Referred  to  in  the  Policy 65 

§  56.  Statement  of  Present  Use    65 

§  57.  Questions  Unanswered  or  Partially  Answered 66 

g  58.  A  Breach  Avoids  though  not  Connected  with  the  Loss 66 

g  69.  Breach  Avoids  though  only  Temporary. 67 


Table  of  Contents.  xiii 

%  60.  To  Avoid  Forfeiture,  Contract  made  Sererable 67 

§  61.  Void  means  Voidable 67 

§  62.  Election  once  made  is  Final 67 

CHAPTER  VI. 
Waiveb  and  Estoppel. 

§  63.  Nature  of  Waiver  and  Estoppel 68 

§  64.   What  in  General  Constitutes  a  Waiver  or  Estoppel 68 

§  65.   What  tlie  Insured  Seeks  to  Accomplish  by  Invoking  this 

Doctrine 69 

§  66.  The  Disturbance  of  Contract  brought  about  by  Parol  Testi- 
mony   69 

§  67.  Effect  of  this  Doctrine  on  the  Ordinary  Rule  of  Evidence.  70 
§  68.  Reasons  in  Favor  of  Doctrine  of  Waiver  and  Estoppel  in 

Certain  Cases  71 

g  69.  Reasons  against  Doctrine  of  Waiver  and  Estoppel  in  Cer- 
tain Cases 72 

§  70.  How  this  Doctrine  has  Operated  in  Practice    71 

g  71.  Cause  of  the  Conflict  of  Opinion  in  Applying  it 7t 

CHAPTER    VII. 

Waiver  and  Estoppel — Continued. 

§  72.  'What  cannot  be  Waived 78 

§  73.  What  can  be  Waived  :  Stock  Companies 79 

§  74.  New    Subject    of    Insurance    cannot    be    Introduced    by 

Waiver 79 

§  75.  Rule  as  to  Waiver  in  Massachusetts  and  New  Jersey 79 

§  76.  What  (  an  be  Waived  :  Mutual  Companies 80 

§  77.   What  Amounts  to  a  Waiver 81 

^  78.  Knowledge  of  Breach  :  When  a  Waiver 88 

§  79.  Silence  is  not  a  Waiver 82 

§  80.   Proofs  of  Loss  :  Technicalities  when  Waived 83 

§  81.  Denial  of  all  Liability  when  a  Waiver 83 

§  83.  Demanding  Proofs  of  Loss  when  a  Waiver 83 

§  83.  Taking  Part  in  Adjustment  when  a  Waiver 84 

g  84.  Company  may  Defend  on  other  Grounds  than  those  first 

Named 85 

§  86.  A  Retention  of  Proofs  Waives  Defects  that  might  have 

been  Remedied 66 

CHAPTER  VIIL 

Waitib  and  Estoppel  by  Agents. 

§  86.  Ostensible  Authority 87 

g  87.  Undisclosed  Instructions  not  Binding  upon  the  Insured. . .  88 

§  88.   Agency  to  be  Determined  by  the  Facts  of  each  Case 88 

§  89.  Effect  of  Stipulations  in  the  Contract  itself  as  to  who  are, 

or  are  not,  Agents  of  the  Company 89 


xiv  Table  of  Contents. 

FAsa 

g  90.  Effect  of  Stipulations  as  to  the   Manner  of  Exercising 

Autliority    92 

I  91.  Authority  of  Officers  of  the  Company  to  Waive 94 

§  93.   Authority  of  Managers  to  Waive   95 

§  93.  Authority  of  Canvassing  Agents  :  Life. 96 

§  94.  Stipulations  Restricting  the  Authority  of  Canvassing  Life 

Agents 100 

§  95.  Authority  of  Commissioned  Agents  :  Fire 101 

§96.  Of  Special  Soliciting  Agents  :  Fire 102 

§  97.  Of  Other  Special  Agents 102 


CHAPTER  IX. 
Masine  Insurance. 

§    98.  What  is  Marine  Insurance 108 

§    99.  Implied  Warranties 103 

§100.  Warranty  of  Seaworthiness 103 

§  101.  Seaworthiness  is  What  106 

§  102.  Implied  Warranty  :  Deviation  108 

§  103.  Deviation,  when  Proper 110 

§104.  Illegality 110 

§105.  Actual  Total  Loss 112 

§  106.  Constructive  Total  Loss 113 

§  107.  Constructive  Total  Loss  :  United  States 114 

§  108.  Notice  of  Abandonment 115 

§  109.  Effect  of  Abandonment 116 

§  110.  Measure  of  Indemnity 118 

§  111.  Valuation  Apportioned 118 

§  112.  Loss  under  an  Open  Policy 118 

§113.  Damaged  Cargo 119 

§  114.  Labor  and  Expenses 119 

§  115.   Liability  for  General  Average  Losses 119 

§  116.  Insured  may  Claim  whole  Loss  from  Insurer,  leaving  lat- 
ter to  enforce  (ieneral  Average  Contribution 119 

§117.  One-third  off  New  for  Old 120 


CHAPTER  X. 

Qbstbbal  Average  :  Marine. 

§118.  General  Average 191 

§  119.  General  Average  Losses 122 

§  120.  Sacrifices  Enumerated 123 

§121.  Deck  Load 124 

§  122.  Voluntary  Stranding 125 

gl23.   Port  of  Refuge,  and  other  Expenses 125 

§124.  The  Adjustment 126 

g  125.  York  Antwerp  Rules 127 

%  126.  Contributory  Value  of  Freight 182 


Table  of  (\)Ntknts.  X* 

CHAPTER  XI. 

VANS 

I'hb  New  York  Standard  Fire  Policy. 

§  127.  In  Consideration  of  the  Stipulations  and  Premium    ......  184 

§  188.  Insures  aj^ainst  all  Direct  Loss  by  Fire 136 

§  129.  The  Following  Described  Property 136 

§130.  Location 137 

§131.  Held  in  Trust 138 

§  132.  For  whom  it  may  Concern 138 

§  133.  Measure  of  Damages 139 

§  134.  Reinstatement  Clause 140 

§  1H5.  This  Entire  Policy  shall  be  Void 143 

§  136.  Interest  of  the  Insured  not  Truly  Stated 142 

g  137.  In  Case  of  any  Fraud  or  False  Swearing 148 


CHAPTER  XIL 

Standard  Fire  Policy — Continded. 

§138.  Other  Insurance 146 

§139.  Factories  149 

§140.   Watchman 149 

§141.  Increase  of  Risk 150 

§142.  Mechanics    152 

§  143.  Interest  of  Insured 153 

§  144.  Leased  Ground 154 

§145.  Chattel  xMortgage 154 

§148.  Foreclosure 166 


CHAPTER  XIII. 

Standard  Fire  Policy — Continued. 

§  147.  Alienation  Clause  :  Change  of  InterMt 168 

§  148.  Assignment  of  Policy 161 

§  149.  Memorandum  Clause . .  168 

§  150.  Vacancy  Clause 164 

§  151.  Invasion,  Theft,  Neglect,  Explosion,  Lightning,  etc 167 

§  152.  Falling  Building 167 

§  153.  Memorandum  Articles,  Accounts,  Bills,  etc 168 


CHAPTER  XIV. 

Standard  Fire  Policy — Continued. 

§  154.  Application  or  Survey  is  a  Warranty , 169 

§  155.  Wh' )  are  Agents  of  the  Company 171 

§156.  Renewals 172 

g  157.  Cancellation 173 

§  168.  Mortgagee  Clause ^. ...  174 


XVI  Table  of  Contents. 

CHAPTER  XV. 

PA«a 

Standaed  Fire  Policy — fowcLUUED. 

g  159.  Removal  of  Property  for  Safety 177 

g  160.  Notice  and  Account  of  Loss 177 

§  161.  Exhibit  Remains  ;    Submit  to   Examinations ;    Books  of 

Account,  etc 179 

§  163.  Appraisal  or  Arbitration 181 

§  163.  Enforcing  Contract  is  no  Waiver 183 

§  164.   Pro  Rata  Clause :  Other  Insurance 183 

§  165.  Reinsurance 187 

§166.  Subrogation    189 

g  167.  Proximate  Loss:  Spread  of  Fire 191 

§  168.   Limitation  of  Time  to  Sue 193 

§  169.  Mutual  Companies 194 

§  170.  Last  Clause  of  the  Policy  :  Authority  of  Agents  to  Waive.  194 

CHAPTER  XVL 
Life  Insurance  Policy. 

§  171.  The  Beneficiary , 197 

§  172.  Application  Incorporated  into  Contract 199 

§  173.  Statements  as  to  Health  or  Freedom  from  Disease 199 

§  174.  Statements  as  to  Medical  Attendance 201 

§  175.  Statements  as  to  Other  Insurance 201 

§  176.  Statements  as  to  Age 203 

§  177.  Statements  as  to  Family  Relationship 2C3 

§  178.  Statements  as  to  Habits:  Temperate,  etc rJO'i 

§  179.  Statements  as  to  Occupation 203 

§  180.  Statements  or  Requirements  as  to  Residence  and  Travel  . .  203 

§  181.  Statements  about  Bodily  Injuries 204 

CHAPTER  XVII. 
LiFB  Policy — Concluded. 

§  183.  Payment  of  Premiums  206 

§  183.  Assessments 206 

§  184.  Suicide 207 

§  185.  Exception  of  Death  by  the  Hands  of  Justice  or  in  Violation 

of  Law 209 

§186.  Authority  of  Agents 210 

§187.  Errors  in  Age 211 

§188.  Assignments 211 

gl89.  Incontestable 218 

CHAPTER  XVin. 

The  Accident  Policy. 

g  190.  Accident  is  what »18 

§  191    Amount  of  Recovery  and  for  what  Accidents 214 

g  192.  Exception  of  Hazardous  I'^mployment 215 


Ta.blk  of  Contents.  Xvii 

FASX 

§  198.  Injuries  excluded  of  which  there  is  no  Visible  Mark  on 

the  Body 216 

g  194.  Poison,  etc 216 

§  Ift.i.  Pjxccption  of  Injuries  Resulting^  from  Violating  Law. . . .  217 

§  196.   Voluntary  Exposure  to  Unnecessary  Danger 217 

i  197.  Entering   Moving  Conveyance    Using  Steam  as  Motive 

Power,  etc 218 

^  198.  Due  Diligence  for  Personal  Safety  and  Protection 218 

^199.   Insurance  against  Injuries  Received  while  Traveling 218 

CHAPTElt  2LUL 

'j'BE  MjmiNE  Policy. 

g  200.  Name  of  the  Assured 890 

g201.  Lost  or  not  Lost 221 

§202.  At  and  Prom 221 

§'J03.  The  Voyage 22? 

g  204.  The  Subject  of  Insurance 223 

g  205.   Master's  Name 225 

g  206.  Commencement  of  the  Risk. 226 

{^207.  Termination  of  the  Risk 227 

fe  208.  Touch  and  Stay 230 

CHAPrER    XX. 

MAftHfE  Policy — Concluded. 

§  2U9.  Perils  of  the  Seas 231 

§210.  Foundermg  at  Sea ., 282 

§211.  Grounding 283 

§  212.  Collision , 233 

§  213.  Stress  of  Weather 234 

g214.  Fire  234 

g  215.  Perils  of  War , 236 

g  216.  Arrests,  Hestraints,  etc 237 

^  217.  Barratry  of  the  Masters  and  Mariners 238 

g  218.  Jettison 239 

g  219.  All  Other  Perils,  Losses,  or  Aiisfortunes 240 

g  220.  Proximate  Cause 241 

g  221.  A  Peril  Excepted  and  Sea  Peril,  Combined 243 

g  222.  Proximate  Cause  as  Limiting  Insurers'  Liability 243 

g  223,   Wear  and  Tear 244 

g  224.  Original  Defect 246 

g  225.  Sea  Damage  and  Ordinary  Deterioration,  Combined 847 

^  226.  Application  of  these  Principles  to  Particular  Average.  .  .  248 
g  227.  Limitation  of  the  Liability  of  Underwriters.     Losses  not 

Covered 250 

g  228.  The  Sue  and  Labor  Clause 252 

g  229.  Exemption  under  Five  Per  Cent 253 

§  230.  Other  Assurance 253 

§  231.  Warranted  Free  of  Capture ...  26J 

B 


xviii  Table  of  Contents. 

PASS 

K  282.  The  Memorandum  Clause,     Free  of  Average  unless  Gen- 
eral   256 

§  283.  What  Constitutes  Stranding 258 

§  234.  Cargo  on  Deck 261 

§235.  Blockade 261 

§  236.  Average  Distinguished  from  Salvage  Loss 262 

§237.  Riders 262 

J$838.  Adjustmeut 268 


PART  SECOND} 

LSADING   ILLUSTRATIVE  CASB8. 

CHAPTER  I. 
T^o  Rablt  English  Cases.  p*«b 

Tyrie  v.  Fletcher. — Contract  an  entirety.     Premium  not  appor- 

tionable 265 

Smith  V.  Scott. — Insurance  covers  negligence 869 

CHAPTER  II. 

Nature  of  the  Conteact. 

Dalby  v.  In  dia  &  London  lAfe  Asa.  Vo. — Insurance  i  how  "far 

a  contract  of  indemnity , 271 

Rayner  v.  Preston. — A  personal  contract.     Does  not  run  with 

the  property 278 

Oastellain  v.  Preston. — Subrogation 283 

CHAPTER  III. 

OOMBUICMATION  AND  CONSTRUCTION  OP  THE  CONTRACT. 

lliompson  V.  Adams. — Contract  by  parol  or  binding  slip 295 

Lipman  v.  Niagara  Fire  Ins.  Co. — Terms  of  usual  policy  under- 
stood to  govern  contract  closed  by  parol  or  by  binding  slip  .     301 

Merchants^  Mutual  Ins.  Co.  v.  Lyman. — Policy  merges  ante- 
cedent negotiations    . . 305 

Harper  v.  New  York  City  Ins.  Co. — Writing  prevails  over  printed 

form 308 

Winne  v.  Ntagara  Fire  Ins.  Co. — Forfeitures  are  not  favored. .     814 

CHAPTER  IV. 

Rrtbksentations  and  Concealments. 

Phoenix  Life  Ins.  Co.  v.  Raddin. — Representations.  Conceal- 
ments       318 

'fbeae  cMca  sbould  be  read  In  connection  with  the  corresponding  chapters  of  Part  Firet. 


Table  of  Contents.  3tiX 

PAOK 

i^oudfoot  V.  Montefiore. — Concealments   by  agents  :   principal 

held 324 

Blackburn  v.    Vigors. — Concealments  by  agents  :  principal  not 

held 880 

CHAPTER   V. 

(yABKANTIES. 

TJiomson  v.   Weems. — Warranty  of  temperate  habits 889 

Burleigh  v.  Gehhard  Fire  Ins.  Co. — Interpretation  of  a  war- 
ranty: fire 860 

CHAPTER   VI. 
Waivkb  and  Estoppel. 

Union  Mutual  Ins.  (Jo.  v.  Wilkinson. — Waiver  by  act  of  agent .     854 
Van  Schoick  v.  Niagara  Fire  Ins.  Co. — Waiver  by  agent's  knowl- 
edge of  cause  of  forfeiture 862 

JDeweet  v.  Manhattan  Ins.  Co. — The  opposing  view,  that  parol 

evidence  is  inadmissible 369 

CHAPTER  VII. 

Waiver  and  Estoppel — Continued. 

Couch  V.  City  Fire  Ins.  Co. ^Essential  provisions  of  charter  can- 
not be  waived 877 

Union  Mutual  Life  Ins.  Co.  v.  Mowry. — Oral  promise  before  in- 
ception of  contract  no  ground  of  waiver 881 

Landers  (erroneously  reported  Sanders)  v.  Cooper. — New  subject 

of  insurance  cannot  be  introduced  by  waivei= 885 

CHAPTER  VIII. 

ftEBTRICTIONS   ON   AUTHORITY   OF   AgENTS. 

Kausal  v.  Minnesota  Farmers'  Mut.  Fire  Ins.  Asso. — Stipula- 
tion that  soliciting  agent  not  agent  of  insurer 892 

Messelbach  v.  Norman. — Stipulation  prinm  facie  binding 397 

Knickerbocker  Life  Ins.  Co.  v.  Norton. — The  real  fact  of  agency 

will  override  the  recital  in  the  policy 899 

Ryan  v.  World  Mutual  Life  Ins.  Co. — Negligence  not  to  read 

the  application , , 408 

CHAPTER  iX. 

iGlKNiciiAL  Principles  :  Marine. 

Dixon  V.  Sadler.  — Seaworthiness 416 

Burgess  v.  Equitable  Marine  Ins.  Co.— Deviation.   , .    420 

CHAPTER   X. 
(j^ENERAL  Average 

Sta/r  of  Hope.  — Sacrifices,  expenses,  stranding 428 


sx  Table  of  (/ONtents. 


CHAPTER   XI 

New  York  Standard  Fire  Policy. 

Scripture  v.  Lowell  Mutual  Fire  Ins.  Co. — Loss  by  fire 489 

Lyons  V.  Providence  Waxliington  Ins.  Co. — Location  materiaL  .     447 

CHAPTER    XIL 

Clauses  of  the  New  Yokk  Standard  Firk  Policy — Continued. 

Landers  v.  Waterlown  Fire  Ins.  Co.  —Other  insurance.    .    .....     450 

Williams  v.  People's  Fire  Ins.  Co. — Increase  of  risk 453 

Kyle    V.    Commercial    Union   Assur.    Co. — Temporary    breach 

avoids 457 

CHAPTER    XIII. 

Clauses  of  the  New  York  Standard  Fire  Policy — Continued. 

Walton  and  Wife  v.  Agricultural  Ins.  Co. — Alienation.     Change 

of  interest.     Shifting  of  interest 462 

CHAPTER    XIV. 

Clauses  of  the  Nkw  York  Standard  Fire  Policy — Continued. 

Smith  V.  Agricultural  Lis.  6't».— VVarranty  against  incumbrances.     471 

CHAPTER   XV. 

Clauses  of  the  New  York  Standard  Fire  Poi.icy — Concluded. 

Chapman  v.  Pole. — Fraud  and  Overvaluation 475 

Behrens  v.  Germania  Fire  Ins.  Co. — Must  be  intentional  to  avoid.     479 
Walsh   V.  Hartford    Fire  Ins.   Co. — Stipulation   as  to  agent's 

authority  binding 480 

CHAPTER    XVI. 

CliAUSES   OF   THE   LiFK    I'OLICY. 

Cushman  v.  United  States  Life  Lis.   Co. — Warranty.     Disease. 

Medical  attendant 486 

Cobb  V.  Covenant  Mut.  Ben.  Asso. — Medical  treatment.  Con- 
sulting a  physician 491 

CHAPTER    XVII. 

Clausbs  OF  the  Life  Policy — Concluded. 

CritchettY.  The  American  Ins.  Co. — Authority  of  agent  to  ex- 
tend payment  of  premiums     495 

Mallory  v.  Travelers  Ins.  Co.— Death  by  drowning,  accident  or 

suicide 504 

Murray  v.  New  York  Life  Ins.  Co. — Death  from  violation  of 

law 508 


Table  of  Contents.  xzi 

PABB 

CHAPTRB,  XVm. 

Clauses  of  the  Accident  Policy. 

Bacon  v.  U.  *S'.  Mat.  Ace.  Asso. — Accident  or  disease 614 

Lawrence   v.   Accidentia  Jus.    Co. — Direct    and  sole   cause  of 

death  523 

2'ntUe  v.  Traveller's  Ins.   Co. — Voluntary  exposure  to  unneces- 
sary danger 528 

Burkhard  v.  Travellers'  Ins.  So. — Walking  or  being  on  railway..     528 
Northrup  v.  Railway  Passenger  Assur.  Co. — Traveling  by  public 

or  private  conveyance  583 

CHAPTER    XIX. 

Clauses  of  the   Marfnk   Policy. 

Parmeter  v.  Coudns. — Voyage  :  coiiimenceraent  of  risk 635 

Williams  v.  Shee. — Voyage  :  continuance  of  risk 536 

Lidgett  v.  Secretaii. — Voyage  :  termination  of  risk 538 

CHAPTER    XX. 

Clauses  op  the  Marine  Policy — Concluded. 

Thames   tf-   Mersey  Marine   Ins.    Co.  v.  Hamilton. — Perils  In 

sured  against 643 

Oreen  v.  Elmslic. — Capture  :  proximate  cause 549 

Brown  v.  8t.  Nicholas  Ins.  Co. — Loss  by  sea  peril  or  cause  (ice) 

excepted  by  policy 549 

Magnus  v.  Biiitemer.  —Sea  peril  or  wear  and  tear 558 

Great    Western    Lis.    Co.    v.    Fogarty. — Total    loss.     Free    of 

average  unless  general 660 


APPENDIX. 

STATUTES   AND    FORMS. 

CHAPTER  1. 

Statutes  Governing  the  Contract. 

I.  Civil  Codes 569 

11.  Agency 569 

III.  Annexation  of  Application  to  Policy    570 

IV.  Provisions  of  Application  or  By-Laws  to  be  set  forth  in 

Policy 570 

V.  Technical  Forfeitures 571 

VI.  By-Laws  to  Govern  Claims  under  Policies 571 

VII.  Corporate  Seal  not  Required  on  Policy 572 

VIII.  Limitation  of  Time  for  Suit 573 

Statutes,  Fihe  Insurance. 

IX.  Standard  Policies , 573 

X.  Valued  Policies 573 


xxii  Table  of  Contents. 

PASS 

XI.  Notice  and  Proof  of  Loss 674 

XII.  Cancellation  of  Policy 574 

XIII.  Privilege  of  Insured  to  ( 'ancel  Policy 676 

XIV.  Return  of  Unearned  Premiums 576 

Statutes,  Life  Insukance. 

XV.  Protection  of  Wife  and  Children 576 

XVL  Protection  of  all  Beneficiaries 577 

XVII.  Change  of  Beneficiary 677 

XVIII.  Discriminations 578 

XIX.  Discriminations  against  Colored  Persons 579 

XX.  Non-forfeiture 580 

XXL  EffectofWar 581 

XXIL  Suicide 681 

XXIII.  Retaliatory  Laws 681 

XXIV.  Anti-Compact  Laws 683 

I 

CHAPTER  n. 
Forms. 

I.  Standard  Form  of  Fire  Insurance  Policy  for  New  York  State.  684 

IL  Form  of  Mortgagee  Clause 688 

III.  Form  of  Co-insurance  Clause 589 

IV.  Form  of  Percentage  Go-insurance  and  Limitation  Clause. . . .  589 
V.  Form  of  Average  Clause 590 

VL  Form  of  Open  Policy ; 590 

VIL  Form  of  Floating  Policy 590 

VIII.  Form  of  Clause  for  Insurance  of  Rent 593 

IX.  Form  of  Clause  for  Insurance  of  Use  and  Occupancy 693 

X.  Form  of  Proofs  of  Loss 693 

XI.  Form  of  Life  Application 594 

XII.  Form  of  Life  Policy 596 

XIII.  Form  of  Accident  Policy 598 

XIV.  Form  of  Marine  Policy  Cargo 600 

XV.  Form  of  Collision  Clause 602 

XVI.  Examples  of  Adjustments ,    803 


TABLE   OF   LEADING   ILLUSTRATIVE   CASES. 


PASB 

Bacon  V.  United  States  Mut.  Ace. 

Asso 514 

Behrens  v.  Germania  Fire  Ins.  Co.  479 

Blackburn  v.  Vigors ^  330 

Brown  v.  St.  Nicholas  Ins.  Co.  . .  549 
Burgess  v.  Equitable  Marine   Ins. 

Co 420 

Burkhard  V.  Travellers'  Ins.  Co..  528 
Burleigh  v.  Gebhard  Fire  Ins.  Co.  ;:i50 

Castellain  v.  Preston    282 

Chapman  v.  Pole 475 

Cobb  V.  Covenant  Mut.  Ben.  Asso.  491 

Couch  V.  City  Fire  Ins.  Co 877 

Critchett  v.  The  American  Ins.  Co.  495 
Cushman  v.    United   States  Life 

Ins.  Co 486 

Dalby  v.    India  &  London   Life 

Ass.  Co   v/271 

Dewees  v.  Manhattan  Ins.  Co       .  369 

Dixon  V.  Sadler ^.  4i5 

Great  Western  Ins.  Co.  v.  Fogarty  560 

Green  y.  Elmslie.  , 549 

Harper  v.  New  Yorlj;  City  Ins.  Co.  308 
Kausal    v.    Minnesota     Farmers' 

Mut.  Fire  Ins.  Asso i^  392 

Knickerbocker    Life   Ins.   Co.   v. 

Norton 399 

Kyte  V.  Commercial  Union  Assur, 

Co 457 

Landers  v.  Watertown  Fire  Ins. 

Co 450 

Lawrence  v.  Accidental  Ins.  Co. .  522 

Lidgett  V.  Secretan 588 

Lipman  v.  Niagara  Fire  Ins.  Co.V  301 
Lyons  v.    Providence  Washington 

Ins.  Co 447 


PA8B 

Magnus  v.  Buttemer 658 

Maliory  v.  Travelers  Ins.  Co  . . .  504 
Merchants'  Mutual  Ins.  Co.  v.  Ly- 
man ....   305 

Messelbach  v.  Norman 397 

Murray  v.  New  York  Life  Ins.  Co.  508 
Northrup  v.  Eailway  Passenger 

Assur.  Co 533 

Parmeter  v.  Cousins 535 

Phoenix  Life  Ins.  Co.  v.  Raddin.v  818 

Proudf oot  V.  Montefiore "  324 

Rayner  v.  Preston :*  276 

Ryan  v.  World  Mutual  Life  Ins. 

Co 408 

(Sanders)  Landers  v.  Cooper  ....  885 
Scripture  v.  Lowell  Mutual  Fire 

Ins.  Co 439 

Smith  V.  Agricultural  Ins   Co. . .  471 

Smith  V.  Scott /  369 

Star  of  flope r  428 

Thames  &  Mersey  Mar.  Ins.  Co. 

V.  Hamilton 543 

Thompson  v.  Adams    295 

Thomson  v.  Weems 839 

Tuttle  V.  Traveller's  Ins.  Co. .  626 

Tyrie  v.  Fletcher 265 

Union  Mut.  Ins.  Co.  v.  Wilkinson  854 
Union    Mutual   Life  Ins.  Co.  v. 

Mowry 881 

Van  Scboick  v.  Niagara  Fire  Ins. 

Co 863 

Walsh  V.  Hartford  Fire  Ins.  Co.  480 

Walton  V.  Agricultural  Ins.  Co. .  463 

Williams  v.  People's  Fire  Ins.  Co.  453 

Williams  v.  Shee     536 

Winne  v.  Niagara  Fire  Ins.  Co. .  314 


THE   LAAV   OF   INSURAJSTCE. 


PART    FIRST. 


CHAPTER   1. 

NATURE,    ORIGIN,    AND    GROWTH    OF   INSURANCE. 

§  1.  Nature  and  Importance  of  Insurance.— There 

are  certain  serious  casualties  or  accidents,  such  as  shipwreck, 
fires,  and  premature  death  or  disability,  to  which  exposure  is 
very  common  among  mankind,  but  which  actually  occur  in 
comparatively  few  instances.  It  is  dilBcult  or  impossible  to 
predict  or  prevent  the  happening  of  these  events,  but  it  is  often 
of  the  greatest  consequence  to  those  most  intimately  concerned 
to  guard  against  the  loss  of  property  or  future  earnings  which 
their  occurrence  entails. 

This  result  may  be  accomplished  by  means  of  a  general  fund 
obtained  by  the  imposition  of  a  small  contribution  or  premium 
upon  the  many  who  are  exposed  to  the  common  hazard,  out  of 
which  the  few  who  actually  suffer  may  be  indemnified.   - 

Insurance  is  the  system  for  distributing  losses  of  this  charac- 1 
ter  in  the  manner  just  described.  Its  principal  branches  are  ; 
fire,  life  (including  also  accident),  and  marine  insurance;  and,  as 
an  institution,  the  development  of  these  branches  of  insurance 
among  civilized  peoples  of  modern  times  has  assumed  a  vast 
and  increasing  importance.  It  is  not  necessary  to  recite  many 
statistics  in  illustration  of  this  fact.     A  very  few  will  suflice. 

For  assistance  in  the  preparation  of  Home    Ins.    Co. ,    and    to    Sheppard 

this  chapter  I  am  indebted  to  D.  A.  Homans,    Esq.,    Pres.    of    Provident 

Heald,  Esq.,  Ex-Pres.  of  Nat.  Board  Savings    Life  As.    So.,  and    to    Mac- 

of  Fire   Underwriters    and    Pres.    of  Arthur  on  Mar.  Ins. ,  and  the  Enc.  Brit. 


2  Insurance  :    Fire,  Life,  JViarine.  §  2 

For  the  last  year,  in  this  country  alone,  it  is  estimated  that  the 
value  of  outstanding  risks  carried  by  insurers  against  fire 
amounted  to  more  than  $12,000,000,000,  and  that  the  payment 
of  premiums  for  life  insurance  for  the  same  year  nearly  reached 
the  sum  of  $200,000,000;  while  the  loss  by  fire  during  the 
same  period,  of  property  insured  and  uninsured,  is  estimated  to 
have  exceeded  $120,000,000.  To  the  sufferers  by  the  great 
Chicago  fire  of  1871,  the  fire  companies  paid  over  $90,000,000, 
by  aid  of  which  that  city  was  enabled  within  a  few  months  to 
regain  its  commercial  activity  and  preeminence  among  the 
cities  of  the  West. 

Fire  insurance  concerns  a  larger  number  of  persons  prob- 
ably than  any  other  branch  of  insurance ;  but,  on  the  other 
hand,  many  persons  who  have  made  no  great  accumulations  of 
capital  insure  their  lives  in  large  amounts.  Marine  insurance, 
from  its  nature,  is  somewhat  restricted  and  localized  as  com- 
pared with  the  other  departments,  and  both  the  business  and 
the  practice  of  the  law  of  this  branch  of  insurance  fall  into  the 
hands  of  specialists  to  a  greater  extent  than  in  the  case  of  other 
classes  of  insurance. 

There  are  certain  minor  forms  of  insurance  which  do  not 
fall  within  the  scope  of  this  book,  as,  for  example,  against  light- 
ning, tornadoes,  hail-storms,  boiler  explosions,  injuries  to  plate 
glass,  defaults  or  breaches  of  trust  on  the  part  of  officers,  trus- 
tees, agents,  or  employees,  defects  in  real  estate  titles,  death  to 
live-stock,  and  to  indemnify  merchants  for  loss  from  giving 
credit. 

Insurance  against  accident  to  the  body  or  health  of  per- 
sons may  be  considered  a  branch  of  life  insurance,  and  subject 
to  the  same  principles  of  law. 

§  2,  Conditions  Necessary. — The  conditions  which  in 
general  are  necessary  to  the  successful  operation  of  a  system 
of  insurance  are  said  to  be  these  :  There  must  be  a  risk  of  real 
loss  which  it  ought  to  be  beyond  the  power  of  either  the 
insurer  or  the  insured  to  avert  or  to  hasten  ;  a  large  number 
of  persons  must  be  liable  to  the  like  risk ;  the  casualty  contem- 
plated must  be  likely  to  fall  on  a  comparatively  small  number 
of  the  persons  exposed  to  the  risk  of  it ;  the  probabilities  of  its 
occurrence  must  be  capable  of  being  estimated  beforehand  with 


§  3  Nature,  Origin,  and  Growth  of  Insurance.  3 

some  approximation  to  certainty  ;  the  loss  apprehended  raast 
be  so  consi(lerable  when  it  does  occur  as  to  be  worth  providing 
against ;  and  the  cost  of  that  provision  must  be  comparatively 
so  small  as  not  to  be  prohibitive. 

To  this  list  of  requisites  may  be  added  an  honest  adminis- 
tration, and  some  means  of  securing  permanency  and  integrity 
to  the  general  fund. 

§  3.  Insurance  Companies. — The  bulk  of  the  business 
of  insurance  is  now  transacted  by  corporations,  which,  on  ac- 
count of  their  exemption  from  liability  to  natural  death,  and 
their  facility  for  raising  capital  and  extending  their  operations 
over  wide  areas  of  territory,  are  peculiarly  well  adapted  to 
serve  in  the  capacity  of  insurers.  But  a  not  inconsiderable 
fraction  of  life  insurance  business  is  in  the  hands  of  friendly 
organizations  and  benefit  societies,  guilds,  orders,  odd  fellows, 
knights,  and  unions,  of  one  sort  or  another,  many  of  which  are 
incorporated,  and  some  of  which  are  not.  The  members  of 
these  organizations  are  governed  by  their  by-laws  and  other 
regulations,  as  well  as  by  the  statutes  and  common  law  of  the 
land.i 

In  this  country  insurance  corporations  are  usually  organized 
under  general  laws  instead  of  special  charters,  and  are  divided 
into  stock,  mutual,  and  mixed  companies.  A  stock  or  proprie- 
tary company  has  for  its  basis  a  capital  stock,  owned  by  stock- 
holders, who  may  be  quite  distinct  from  the  insured.  It  ordi- 
narily insures  at  lower  premium  rates  than  those  of  mixed  or 
mutual  companies,  and  its  profits  over  and  above  required  ac- 
cumulations and  the  liabilities  of  the  company  are  divided  in 
the  shape  of  dividends  among  the  stockholders.  In  mutual 
companies  there  are  no  stockholders,  but  the  insured  themselves 
are  the  members  of  the  company,  entitled  to  the  management 
of  its  affairs  and  to  the  receipt  of  any  share  of  surplus  premiums 
over  and  above  those  needed  for  the  payment  of  losses  and  ex- 
penses. Mixed  companies  partake  of  the  nature  of  stock  and 
mutual  companies,  and  in  them  a  certain  portion  of  the  profits 
is  paid  to  the  stockholders,  and  the  remainder  distributed 
among  the  insured.     Premiums  in  most  companies  are  ])aid  in 

-  Treadway  V.  Hamilton  Mutual  Ins.     ship  Ins.  Asso.  v.  VVyllie.  L.  R..  22  Q. 
Cto.,  29  Conn.  68.     Great  Brit.  Steam-    B.  D.  710  (1889). 


4  Insurance  :    Ftre,  Life,  Marine.  §  4 

cash  in  advance  at  stated  intervals,  but  in  other  companies  by 
means  of  assessments  levied  from  time  to  time  upon  the  insured 
of  a  certain  class  to  meet  the  losses  which  have  occurred  in  that 
class  ;  and  the  company  is  bound  in  good  faith  to  lay  an  assess- 
ment by  which  it  may  meet  a  loss  in  accordance  with  the  spirit 
of  its  contract.^  In  mutual  companies  premiums  are  often  paid 
in  whole  or  in  part  by  notes  of  the  insured,  which  are  held  by 
the  company,  and  from  time  to  time  assessed  to  pay  losses  and 
expenses.  Premium  notes  are  sometimes  made  a  lien  on  the 
property  insured.  Life  companies  frequently  offer  to  make  loans 
to  the  insured,  taking  the  contract  of  insurance  as  collateral. 

In  this  country  the  mutual  plan  has  been  much  more  suc- 
cessful in  marine  and  life  insurance  than  in  lire. 

In  the  United  States,  as  a  general  thing,  in  the  laws  gov- 
erning the  organization  and  scope  of  insurance  corporations, 
the  business  of  ocean-marine,  fire,  and  life  insurance,  respec- 
tively, is  kept  somewhat  distinct  and  exclusive ;  in  New  York 
and  elsewhere  life  companies  are  forbidden  to  take  marine  or 
fire  risks,  but  fire  insurance  companies  are  often  organized  to 
insure  against  inland  marine  disasters,  lightning,  and  torna- 
does. In  the  West,  fire  losses  to.  crops,  whether  standing  or 
cut,  are  an  important  item, 

§  4.  Statutory  Safeguards. — For  the  better  protection 
of  the  insured,  it  has  been  customary  throughout  the  States  of 
this  Union,  as  well  as  in  England,  to  establish  by  law  an 
insurance  department,  or  superintendent  or  commissioner  of 
insurance,  or  other  official,  with  whom,  as  a  rule,  foreign  insur- 
ance companies  doing  business  within  the  State,  and  domestic 
life  insurance  companies,  with  certain  exceptions,  are  required, 
upon  organization  or  commencement  of  business  within  the 
State,  to  make  deposits  of  money  or  equivalent  securities, 
which  are  held  as  collateral  b}^  the  department  for  the  security 
of  the  insured.  This  official,  called  by  different  names  in  dif- 
ferent States,  has  considerable  discretionary  power  to  decide 
whether  under  the  laws  of  the  State  a  foreign  company  is  enti- 
tled to  be  admitted  to  transact  business  within  the  State.'' 

The  insurance  department  receives  stated  reports  from  each 

'  Lawler  v.  Murphy,  58  Conn    294        '  Am.    Casualty    Co.    v.  Tyler,    60 
(1890),  by  Seymour,  J.  Conn.  448  (1891),  by  Andrews,  C  J. 


§  5  Natuke,  Okigin,  and  Gkowth  of  Insukance.  6 

company,  setting  forth  with  some  detail  its  business  affairs  and 
financial  condition,  including  its  assets  and  debts,  amount  of 
insurance,  and  other  particulars.  It  also  has  a  visitorial  power 
over  the  companies,  to  see  that  their  investments  are  made 
according  to  law,  and  to  examine  their  books  and  papers  in 
case  of  suspected  misconduct  or  insolvency. 

In  addition  to  these  safeguards,  there  are  laws  requiring 
the  companies,  before  paying  out  dividends  or  profits,  to  accu- 
mulate and  reserve  a  certain  amount  of  assets  with  which  to 
meet  any  future  liabilities ;  also,  laws  directing  foreign  com- 
panies to  appoint  a  representative  within  the  State  upon  whoro 
service  of  papers  can  be  made. 

The  object  of  insurance  is  to  compensate  the  insured  for  loss 
and  not  to  prevent  the  occurrence  of  loss ;  but  in  many  of  the 
cities  the  fire  insurance  companies  have  established  a  system  of 
patrol  with  statutory  powers,  which  does  much  to  prevent  the 
spread  of  fire,  and  to  protect  from  unnecessary  injury  or  theft 
ihe  property  exposed  during  and  after  the  conflagration. 

Any  State  has  the  right  to  control  the  conduct  of  insurance 
business  by  the  enactment  of  suitable  statutory  regulations. 
It  may  make  a  compliance  with  these  by  a  foreign  company 
the  condition  of  doing  business  within  the  State,  or  it  may  ca- 
priciously shut  its  doors  to  a  foreign  corporation  without  any 
reason  at  all.^  Subject  to  such  statutes,  many  of  the  insurance 
companies  transact  business  throughout  the  country  generally. 

§  5.  Origin  of  Insurance  and  Insurance  Law. — 

The  origin  of  the  business  of  insuring  or  underwriting  is  a 
matter  of  doubt.  The  practice  of  marine  underwriting  by 
individuals  lays  claim  to  great  antiquity.  Some  suppose  it  to 
have  existed  under  the  early  Roman  emperors.  But  it  is  more 
probable  that  it  was  started  in  connection  with  the  revival  of 
commerce  which  took  place  in  the  twelfth  or  thirteenth  cen- 
tury after  Christ,  especially  among  the  flourishing  republics  of 
Italy.  At  that  time  the  ocean  commerce  of  Christendom  was 
largely  undertaken  by  merchants  of  the  north  of  Italy,  tlier, 
generally  known  by  the  name  of  Lombards,  who  had  estab- 
lished trading  companies  in  almost  every  country  in  Europe. 

'  Doyle  V.  Continental  Ins.  Co.,  94     119  U.   S.   110.    Barron  v.  Bumside, 
U.  S.  585.     Phi>.   ii'v-e  Asso.  v.  N.  Y.,     121  U.  S.  186. 


6 


Insurance  :    Firk,  Life,  Marine. 


§5 


The  Lombards  appear  to  have  carried  the  practice  of  marine 
insurance  wherever  they  had  mercantile  deahngs,  and  thas  to 
have  gained  for  it  a  footing  in  most  of  the  great  European  cen- 
ters of  maritime  trade.  The  name  of  the  insurance  contract, 
called  a  "policy,"  is  of  Italian  derivation. 

It  is  said  that  a  "  chamber  of  assurance  "  was  established  in 
the  city  of  Bruges  as  early  as  a.  d.  1310,  with  various  regulations 
for  the  government  of  the  insurers  and  the  insured.  A  form 
of  policy,  supposed  to  be  the  oldest  extant,  is  given  in  the  note, 
the  original  of  which  is  in  the  Italian  language,  and  was  estab- 
lished by  the  statute  of  Florence,  January  28,  1523.^ 


*  "  Be  it  known  and  made  manifest 
to  all  persons,  that  of 

makes  assurance  on 

,  merchandise  belonging  to 
him  or  his  friends,  or  to  whomsoever 
the  same  may  belong,  laden  or  to  be 
laden  for  [such  or  such  a  port  or  road- 
stead in  such  a  place]  by  the  hands  of 
,  or  his  agent,  or  although 
others  have  laden  it  in  the  name  of 
the  aforesaid  ,  or  in  some 

other  name  designated  or  not  desig- 
nated on  board  the  ship  named 

,  or  howsoever  named,  commanded 
by  .     We  begin  the  said 

insurance  from  the  time  when  the  said 
goods  shall  be,  or  shall  have  been, 
laden  on  board  the  said  ship  in  [such  a 
place],  to  continue  until  the  said  mer- 
chandise shall  be  discharged  on  land 
or  in  safety  at  [such  a  place],  with 
liberty  for  the  ship  to  touch  at  any 
other  place,  and  to  navigate  forwards 
or  backwards,  to  the  right  hand  or  the 
left,  at  the  pleasure  of  the  captain,  and 
as  he  may  require:  The  said  assurers 
taking  upon  themselves  in  respect  of 
the  said  goods  the  risk  of  all  perils  of 
the  seas,  fire,  jettison,  reprisals,  rob- 
bery by  friend  or  foe,  and  every  other 
chance,  peril,  misfortune,  disaster, 
hindrance,  misadventure,  though  such 
as  could  not  be  imagined  or  supposed 
to  have  occurred,  or  be  likely  to  occur, 
to  the  said  goods,  and  barratry  by  the 


master,  except  as  to  stowage  or  custom- 
house. All  the  said  risks  the  said  in- 
surers are  to  run  and  take  on  them- 
selves until  the  said  goods  shall  be 
safely  discharged  on  shore  at  [such  a 
place] ;  and  if  they  are  not  laden,  the 
insurers  are  entitled  to  retain  one  and 
a  half  per  cent. 

"  And  if  the  said  goods  shall  sustain, 
or  have  sustained,  any  disaster  (which 
God  forbid),  the  insurers  shall  pay  to 
the  said  the  sum  insured,  within 

two  months  from  the  news  reaching 
the  city. 

"  And  i  f  within  six  months  there  shall 
have  been  no  true  news,  the  insurers 
shall  pay  to  the  said  the  sum 

insured ;  and  in  case  of  subsequent 
arrival  and  safe  discharge  at  the  said 
place,  the  aforesaid  shall  pay  back  to 
each  the  sum  he  has  received.  In  tbw 
event  of  shipwreck,  it  is  allowed  to 
make  recovery  without  authority  from 
the  insurers,  it  being  stipulated  that 
the  said  insurers  are  not  responsible  for 
theft  by  the  captain  of  the  said  ship. 

' '  And  the  insurers  are  bound  first  to 
pay  to  the  aforesaid  the  sums  insured, 
and  to  litigate  afterwards.  And  these 
are  to  bind  themselves  by  suflicien': 
sureties  (one  or  more  as  directed  by 
the  fire  official  deputies  on  insura/ic*) 
to  pay  back  to  each  insurer  the  sums 
they  have  received,  with  damages  of 
twenty  per  cent.     The  time  allowed  to 


§  5  Nature,  Origin,  and  Growth  of  Insurance.  7 

The  provision  of  this  pohcy,  that,  if  the  insurers  wished  to 
contest  the  Question  of  their  hability,  they  must  pay  first  and 
litigate  afterwards,  is  worthy  of  notice. 

At  the  initial  stage  of  its  existence,  the  contract  of  insur- 
ance was  underwritten  by  individuals  and  was  regulated  by 
mercantile  custom,  which  became  the  foundation  of  all  the 
laws  and  codes  subsequently  enacted  upon  the  subject. 

A  recorded  mention  of  insurance  in  England  in  1548  indi- 
cates that  the  practice  of  insuring  had  been  in  vogue  there  for 
some  time,  and  somewhat  later,  on  opening  Queen  Elizabeth's 
Urst  parliament.  Lord  Bacon  said  :  "  Doth  not  the  wise  mer- 
chant in  every  adventure  of  danger  give  part  to  have  the  rest 
assured?"  But  for  many  years  after  its  introduction  into  that 
country,  the  law  of  insurance  was  unknown  to  the  courts  of 
Westminster,  and  insurance  disputes  were  as  a  rule  settled  by 
the  arbitration  of  mercantile  men. 

The  first  reported  insurance  case  belongs  to  the  year  1589, 
and  is  mentioned  by  Sir  Edward  Coke,^  in  which  it  was  held, 
"  where  as  well  the  contract  as  the  performance  of  it  is  wholly 
made  or  to  be  done  beyond  sea,  it  is  not  triable  by  our  law, 
but  if  the  promise  be  made  in  England  it  shall  be  tried." 

In  1601,  to  provide  for  the  growing  practice  of  resorting  to 
litigation,  a  special  tribunal  for  the  trial  of  marine  insurance 
cases  was  established  in  England,^  of  which  the  recital  was  as 
follows : 

"  Whereas  it  ever  hathe  bene  the  policie  of  this  realme  by 
all  good  means  to  com  forte  and  encourage  the  merchante, 
therebie  to  advance  and  increase  the  generall  wealth  of  the 
realme,  her  Majestie's  customes,  and  the  Strength  of  Ship- 
.pinge,  which  Consideracion  is  nowe  the  more  requisite  be- 
cause trade  and  traffique  is  not  at  this  present  soe  open  as 
at  other  tymes  it  hathe  bene.  And,  whereas  it  hathe  bene 
tyrae  out  of  mynde  an  usage  among  the  merchantes,  both  of 
this  realme  and  of    forraine  nacyons,  when  they  make   any 

the  insurers  for  proving  is   eighteen  to  every  other  judgment  and  court, 

months.  whither  the  said              shall  please  to 

"To  the  observance  of  this  the  in-  summon  them." 

surers  bind    themselves   to  the   said  '  Dowdale's  case,  Coke's   Reports, 

,  themselves,  their  heirs,  and  part  (J,  p.  476. 

goods  present  and  future,  submitting  ^  43  Eliz.  c.  13. 
themselves  to  the  office  aforesaid,  and 


8  Insukamck  :    Fikk,   Likk,  Marine.  §  6 

great  adventure  (especiallie  into  remote  parts),  to  give  some 
Consideracion  of  money  to  other  persons  {which  cominonlie 
are  in  no  small  numher),  to  have  from  them  assurance  made 
for  their  goodes,  merchandize,  ships  and  things  adventured,  or 
some  parts  thereof,  at  such  rates  and  in  such  sorte  as  the 
parties  assurers  and  the  parties  assured  can  agree,  which 
course  of  deahnge  is  commonlie  termed  a  pohcie  of  assurance, 
&c." 

This  informal  tribunal — which  consisted  of  the  Judge  of  the 
Admiralty,  the  Recorder  of  London,  two  doctors  of  the  civil 
law,  two  common  lawyers,  and  eight  grave  and  discreet  mer- 
chants, or  any  five  of  them — died  a  natural  death  within  a  cen- 
tury after  its  organization,  and  by  degrees  insurance  disputes 
began  to  come  within  the  jurisdiction  of  the  common  law  courts 
of  England. 

In  1Y56  Lord  Mansfield  was  appointed  Chief  Justice  of 
the  Court  of  Queen's  Bench,  and  during  his  illustrious  career  he 
was  conspicuous  in  making  the  policy  of  insurance  the  subject 
of  careful  study.  From  the  old  sea  laws,  the  foreign  ordi- 
nances, the  writings  of  jurists,  and  the  usages  of  trade,  he  drew 
and  shaped  those  principles  which  formed  the  nucleus  of  the 
present  system  of  insurance  law. 

§  6.  Lloyd's  and  Lloyd's  Usages. — The  body  of  rules 
or  trade  customs  under  which  the  business  of  insurance  had 
grown  up  was  known  as  "  the  usages  of  Lloyd's."  To  these 
usages  and  the  earlier  maritime  customs  we  must  look  to  find 
an  origin  for  such  far-reaching  and  significant  principles  of  in- 
surance law  as  the  following :  namely,  that  the  contract  is  one 
uberrimce  jidei,  demanding  a  disclosure  of  all  material  facts 
affecting  the  risk ;  that  personal  acts  of  the  insured  himself 
which  materially  change  and  enhance  the  risk  during  the  pend- 
ency of  the  policy  will  avoid  the  contract ;  that  there  must 
be  no  deviation  under  a  marine  policy  from  the  usual  voyage 
as  prescribed  by  custom ;  that  the  vessel  must  be  seaworthy 
at  the  commencement  of  the  risk  in  a  voyage  policy ;  that 
goods  stowed  on  deck  are  not  protected  by  the  policy  in  the 
absence  of  a  general  trade  usage  to  the  contrary  ;  and  that 
expenditures  and,  if  successful,  intentional  sacrifices  of  ship  or 
cargo,  made  by  the  master  of  the  ship  for  the  benefit  of  al/ 


§  6  Nature,  Okiqin,  and  Growth  ov  Insurance.  9 

interests  exposed  to  some  extreme  and  impending  peril,  must 
be  made  the  subject  of  general  average  or  contribution  from 
all  such  interests,  whether  ship,  cargo,  or  freight. 

Lloyd's  was  originally  a  coffee-house  in  London,  a  cele- 
brated resort  for  seafaring  men  and  those  who  were  engaged 
in  maritime  business.  It  was  started  in  the  latter  part  of  the 
seventeenth  century,  at  a  time  when  the  coffee-houses  of  that 
metropolis  were  the  fashionable  centers  for  mercantile  or  social 
intercourse.  An  advertisement  in  the  London  "  Gazette  "  of 
February  18  to  21,  1688,  concerning  a  supposed  theft  "  by  a 
middle-sized  man  with  pockholes  in  his  face,"  indicates  that 
Lloyd's  coffee-house  was  then  located  in  Tower  Street.  But 
within  three  or  four  years  from  that  date,  the  establishment 
was  removed  from  Tower  Street  to  the  corner  of  Lombard 
Street  and  Abchurch  Lane,  where  it  became  the  world-re- 
nowned center  for  commercial  intelligence  and  for  the  business 
of  marine  underwriting.  After  several  other  removals,  it 
ultimately  took  possession  of  its  apartments  in  the  new  Royal 
Exchange. 

In  1696  the  proprietor  started  a  shipping  and  commercial 
newspaper,  called  ''  Lloyd's  News ; "  the  issue  of  which  was 
afterwards  suspended  because  the  editor  was  guilty  of  printing 
some  very  harmless  information  about  the  proceedings  in  the 
House  of  Lords,  but  it  was  revived  in  1726  in  a  greatly 
improved  form  under  the  name  of  ''  Lloyd's  Lists." 

In  1769,  in  order  to  put  a  stop  to  the  illegitimate  trans- 
actions which  occasionally  took  place  within  their  circle,  the 
principal  merchants  and  underwriters  frequenting  the  coffee- 
houses formed  themselves  into  a  society  under  fixed  rules. 

In  1779  the  society  adopted  for  exclusive  use  a  definite 
form  of  policy  thenceforward  known  as  "  Lloyd's  Policy," 
which  is  the  basis  of  the  policies  now  in  use  in  the  United 
States,  and  which  corresponds  with  the  present  Lloyd's  policy, 
except  that  the  words  "  Be  it  known  that "  have  been  sub- 
stituted for  the  opening  asseveration  "  In  the  Name  of  God, 
Amen,"  which  appeared  in  the  earlier  form,  this  change  having 
been  effected  in  the  year  1850.  Though  Mr.  Justice  Buller 
characterized  the  instrument  as  "absurd  and  incoherent,"^ 
it  possesses  the  merit  of  having  had  all  its  clauses  explained  by 
■     '  Brough  V.  iVhitmore,  4  T.  R,  206. 


lO  Insurance  :    Fire,  Life,  Marine.  §  6 

many  legal  decisions.^  In  its  stability  it  is  in  striking  con- 
trast with  the  fire  policy,  which  during  its  history  has  exhibited 
a  series  of  sliil'ting  forms,  which  have  given  rise  to  much  con- 
fusion and  uncertainty  both  in  the  business  and  in  the  law  of 
insurance.  As  the  courts  from  time  to  time  have  adjudicated 
away  by  a  strict  construction  the  restrictions  and  exemptions 
from  liability  named  in  the  fire  policy,  its  phraseology  has  been 
altered  by  the  insertion  of  a  more  and  more  explicit  wording 
in  favor  of  the  insurers,  until  in  many  instances  the  legislatures 
of  the  several  States  have  been  provoked  to  interference  by 
sweeping  statutory  enactments  Avhich  govern  the  contents  and 
legal  effect  of  the  fire  insurance  contract  within  those  States.' 
Classified  references  to  these  statutes  are  given  in  the  appendix. 

One  of  the  clauses  of  Lloyd's  policy  is  as  follows :  "  And 
it  is  agreed  by  us  the  insurers  that  this  writing  or  policy  of 
assurance  shall  be  of  as  much  force  and  effect  as  the  surest 
writing  or  policy  of  assurance  heretofore  made  in  Lombard 
Street,  or  in  the  Royal  Exchange,  or  elsewhere  in  London," 
which  shows  that,  although  at  the  time  when  this  form  was 
drafted,  the  connection  between  Lloyd's  and  Lombard  Street 
had  long  been  severed,  the  memory  was  still  preserved. 

It  was  from  early  times  the  custom  at  Lloyd's  rooms  to 
pass  around  the  proposed  |X)licy  of  the  applicant  among  the 
members,  and  each  member  underwrote  or  subscribed  his  name 
for  such  portion  of  the  required  amount  as  he  wished  to  under- 
take, together  with  the  date  of  subscription,  until  in  this  way, 
by  successive  subscriptions  by  different  persons  on  the  same 
policy,  the  desired  amount  was  covered. 

In  18T1  the  Society  of  Lloyd's  was  incorporated  by  special 
act  of  Parliament  (34  Vict.  c.  xxi.),  one  of  the  express  objects  of 
incorporation  being  the  "  collection,  publication,  and  diffusion  of 
intelligence  and  information  with  respect  to  shipping."  In  the 
accomplishment  of  this  object  it  has  attained  an  unrivaled 
standard  of  perfection.  Lloyd's  members  have  developed  a 
system  of  agency  radiating  everywhere  throughout  the  mari- 
time world,  by  which  they  are  enabled  to  receive  the  promptest 
and  most  rehable  information  of  all  departures  from  and 
arrivals  at  their  ports,  as  well  as  of  losses,  casualties,  and  other 
useful  shipping  news. 

»  Simond  v,  Boydell,  Doug.  268.  '  ReiUy  v.  Ins.  Co.,  48  Wis.  456. 


§  8  Nature,  Origin,  and  Growth  of  Insurance,  li 

"  Lloyd's  Lists  "  contain  reports  of  mercantile  intelligence 
of  this  character,  whicii  is  classified  and  posted  on  different 
colored  slips  of  paper  for  the  benefit  of  members  and  subscrib- 
ers, and  afterwards  carefully  sifted  and  recorded. 

The  ''  black  book  "  contains  a  record  of  some  3,000  casual- 
ties per  year,  and  the  telegraph  room  is  known  as  the  "  chamber 
of  horrors." 

When  a  ship  is  "  posted "  at  Lloyd's  "  as  missing,"  the 
recognized  time  has  come  to  make  claim  upon  the  insurers  for 
the  loss. 

''  Lloyd's  Captains'  Eegister  "  is  a  biographical  dictionary  of 
all  of  the  certified  commanders  of  the  British  mercantile  marine. 

"  Lloyd's  Eegister  of  British  and  Foreign  Shipping,"  pub- 
lished annually,  gives  full  details  of  every  British  ship,  respect- 
ing its  ownership,  construction,  tonnage,  and  rating.  Its 
symbol  "A  1  "  for  the  highest  class  of  wooden  vessels  has 
passed  i\Ho  popular  usage  ;  "100  A  1  "  means  the  highest  class 
of  iron  vt'ssels. 

A  standard  London  periodical  has  recently  said  :  "  Towering 
head  and  shoulders  above  the  crowd  of  institutions  that  have 
helped  to  win  for  England  the  maritime  supremacy  of  the 
world,  stands  the  corporation  of  Lloyds.  Its  collapse  would 
be  more  widely  felt  than  that  of  any  other  commercial  institu- 
tion in  the  world." 

§  7.  Largest  American  Marine   Company. — Both 

absolutely  and  in  relation  to  the  other  principal  classes  of  insur- 
ance, ocean-marine  insurance  occupies  a  position  of  greater 
importance  in  England  than  in  America.  In  the  volume  of  its 
business  the  foremost  marine  company  in  the  United  States, 
second  perhaps  not  even  to  British  Lloyd's,  is  the  Atlantic 
Mutual  of  New  York. 

§  8.  Fire  Insurance. — Fire  insurance  as  an  organized 
system  has  had  an  origin  comparatively  recent,  and  it  was  not 
until  after  the  great  London  fire  of  1666  that  it  took  any  very 
practical  shape,  though  back  in  Anglo-Saxon  times  there  is  evi- 
dence of  attempts  among  friendly  guilds  to  guarantee  protection 
against  fire  and  other  calamities  by  mutual  contribution.  In 
X681  the  first  regular  office  for  insuring  against  loss  by  fire 


12  Insdkanoe  :    Fire,  Life,  Makine.  §  9 

was  opened  by  a  combination  of  persons  at  the  rear  of  the 
Royal  Exchange,  and  in  1710  the  Sun  Fire  Office,  the  earUest 
mutual  and  stock  company,  was  organized  in  London. 

The  first  fire  company  established  in  the  United  States  was 
"  The  Philadelphia  Contributionship  for  Insuring  Houses  from 
Loss  by  Fire,"  incorporated  on  the  mutual  plan  in  1752.  one  of 
its  early  directors  having  been  Benjamin  Franklin.  In  the  extent 
of  risks  undertaken,  the  largest  fire  companies  in  the  world 
are  the  Royal,  and  The  Liverpool  &  London  &  Globe,  both 
incorporated  in  England,  but  having  important  branches  in 
this  country. 

Of  the  American  companies,  the  Home,  of  New  York,  and 
the  ^tna,  of  Hartford,  stand  at  the  head.  It  is  said  that  to 
the  enterprising  city  of  Hartford  belongs  the  credit  of  giving 
vitality  to  the  agency  system  throughout  the  United  States, 
and  of  exhibiting  a  larger  investment  of  capital  in  insurance 
stock,  in  proportion  to  its  size,  than  any  other  city  in  the 
country  is  able  to  show. 

§  9.  Life  Insurance. — The  earliest  practical  embodiment 
in  the  direction  of  life  insurance  was  the  foundation  in  1706 
by  royal  charter  in  Great  Britain  of  "  The  Amicable  Society  for 
a  Perpetual  Assurance  Office."  The  scheme  was  simply  to  raise 
a  fixed  contribution  from  each  member,  and  from  the  proceeds 
to  distribute  a  certain  sum  each  year  among  the  representa- 
tives of  those  who  had  died  during  the  year.  No  one  was  to 
be  admitted  under  the  age  of  twelve,  nor  above  the  age  of 
fifty-five,  but  all  were  to  pay  the  same  rate  of  contribution. 

In  1'734  the  Society  made  arrangements  for  guaranteeing 
that  the  dividend  for  each  deceased  member  should  not  be  less 
than  £100,  which  was  the  first  approach  to  an  assurance  of  a 
definite  sum  at  death,  whenever  that  might  occur. 

The  Equitable  Assurance  Society  of  London,  which  was 
organized  under  a  deed  of  settlement  and  commenced  business 
in  1762,  may  be  regarded  as  the  pioneer  of  the  modern  system 
of  life  insurance.  It  issued  policies  for  the  assurance  of  fixed 
sums  on  single  or  joint  lives,  or  on  survivorships,  and  for  any 
term.  The  premiums  were  regulated  according  to  age.  Lives 
were  admitted  with  due  regard  to  their  state  of  health  and 
other  circumstances. 


§  9  Nature,  Origin,  and  Growth  of  Insurance.  13 

The  creation  of  corporations  in  America  with  power  to  in- 
sure lives  and  grant  annuities  dates  back  beyond  the  Revohition, 
one  of  the  earliest  companies  being  chartered  in  tlie  colony  of 
Pennsylvania  as  early  as  1769,  for  the  benefit  of  the  families  of 
Presbyterian  clergymen.  But  the  business  of  life  insurance  did 
not  assume  much  importance  until  within  a  period  of  less  than 
fifty  years.  The  first  reported  life  insurance  case  in  the  United 
States  ^  shows  the  existence  of  a  contract  of  life  insurance  as 
early  as  1809.  It  was  in  that  case  contended  by  the  defendant 
that  no  valid  contract  of  life  insurance  could  be  made  within  the 
State  of  Massachusetts,  inasmuch  as  the  law  of  England  in  that 
regard,  it  was  said,  had  never  been  adopted  in  this  country ;  but 
the  court  sustained  the  contract  on  the  ground  that  it  Avas  not 
repugnant  to  the  general  policy  of  the  law  or  to  good  morals, 
and  that  no  reason  had  been  given  for  condemning  such  con- 
tracts, except  by  the  French  Courts  which  considered  "  that  it 
is  indecorous  to  set  a  price  upon  the  life  of  a  freeman  which  is 
above  all  price  '' — a  reason  which  was  pronounced  insufficient, 
especially  as  coming  from  France,  "  where,"  Chief  Justice 
Parker  remarked,  "  freedom  had  never  been  known." 

Accident  insurance,  which  is  a  branch  of  life  insurance,  is  a 
development  of  later  growth.  Ordinary  life  insurance  protects 
against  the  pecuniary  loss  arising  to  a  man's  family,  or  cred- 
itors, or  others,  by  his  death,  whether  that  is  caused  by  old 
age,  accident,  or  disease.  But  accident  insurance  protects  only 
against  losses  caused  by  accident,  whether  resulting  in  death 
or  not. 

An  important  company  was  established  in  London  in  1849 
for  insuring  against  the  consequence  of  railway  accidents — The 
Railway  Passengers  Assurance  Company.  In  1856  its  business 
was  extended  to  embrace  accidents  of  all  kinds.  The  com- 
panies carrying  the  most  extensive  accident  risks  in  the  United 
States,  and  probably  in  the  world,  are  the  Travellers,  of  Hart- 
ford, and  the  Mutual  Accident  Association  of  New  York  City. 

In  the  United  States,  life  insurance  has  attained  a  greater 
relative  importance  among  financial  institutions  than  in  any 
other  country.  During  the  years  which  immediately  followed 
the  close  of  the  civil  war,  it  grew  with  unparalleled  rapidity ;  new 
companies  were  established  in  great  numbers ;  new  features  of 
'  Lord  V.  Dall,  13  Mass.  115. 


14  Insukance  :    Fike,  Life,  Marine.  §  10 

insurance  contracts  were  devised,  and  soliciting  agents  can- 
vassed the  country  from  one  end  to  the  other.  In  the  magni- 
tude of  its  transactions,  no  hfe  insurance  company  in  the  world 
is  able  to  make  comparison  either  with  the  Mutual  or  the  Equi- 
table, or  the  New  York  Life  Insurance  Company,  all  three  of 
New  York  City.  Each  one  of  these  colossal  institutions  ex- 
hibits an  annual  statement  of  assets  greatly  in  excess  of  $100,- 
000,000.  It  is  to  be  observed  that  fire  policies  on  the  average 
are  for  a  much  shorter  term  than  life  policies,  and  that  a  life 
company  is  ordinarily  obliged  to  accumulate  for  the  payment 
of  future  losses  a  much  larger  amount  of  assets  than  is  required 
in  the  conduct  of  the  business  of  marine  or  fire  insurance. 

§  10.  Real  Estate  Title  Insurance. — Passing  notice 
must  be  given  to  a  class  of  corporations  which  have  of  late 
years  been  organized  in  many  large  cities  in  the  United  States 
to  insure  real  estate  titles,  and  which  generally  unite  with  title 
insurance  an  extensive  and  rapidly  increasing  business  of  search- 
ing titles.  Their  policies  obligate  the  insurers,  in  substance,  to 
do  three  things  for  the  protection  of  the  insured :  (1)  to  defend 
suits  against  the  title  at  the  expense  of  the  insurers ;  (2)  to  pay 
judgments  rendered  ;  (3)  and  if  the  insured  contracts  to  sell  or 
loan,  and  the  title  is  refused,  to  test  its  validity  in  court  at  the 
expense  of  the  insurers,  and  if  defeated  to  pay  damages  and  also 
to  take  the  property  where  the  insured  has  contracted  to  sell  it. 

Of  this  class  of  corporations  the  Real  Estate  Title  Insurance 
and  Trust  Company  of  Philadelphia,  organized  in  18Y6,  was  the 
pioneer.  The  Title  Guarantee  &  Trust  Company  of  New  York 
City,  incorporated  in  1882,  does  an  immense  business  in  guar- 
anteeing titles ;  and  the  Lawyers'  Title  Insurance  Company  of 
New  York  City  is  also  an  important  company,  though  it 
gives  precedence  to  its  department  for  searching  titles.  The 
facilities  of  such  permanent  organizations  for  utilizing,  arrang- 
ing, and  recording  the  past  results  of  their  extensive  and  raulti- 
phed  examinations  of  titles  are  so  great  that  it  is  becoming 
more  and  more  difficult  for  individual  attorneys  to  compete 
with  their  prices  in  this  branch  of  legal  work. 

§  11.  Classification  of  Risks. — In  fire  and  marine 
insurance,  risks  are  classified  according  to  the  degree  of  hazard, 


§  11        Nature,  Origin,  and  Growth  of  Insurance.  15 

and  the  premiums  graded  accordingly.  But  in  life  insurance, 
as  a  rule,  only  healthy  persons  are  accepted,  and  consequently 
the  premiums  are  scaled  according  to  age  ;  sometimes,  however, 
special  risks  are  taken  involving  a  hazardous  occupation,  or  an 
unhealthy  location  of  residence,  for  which  an  extra  premium  is 
paid.  In  all  branches  of  insurance  the  amount  of  the  premium 
is  made  to  depend  more  or  less  upon  average  results  which  have 
been  arrived  at  after  elaborate  observations  and  careful  col- 
lection of  statistics  bearing  upon  the  subject. 

In  accepting  or  rejecting  a  proposed  risk,  the  insurers  are 
governed  by  their  familiarity  with  these  general  laws  of  aver- 
age. But  it  is  also  very  important  for  them  to  gain  a  thorough 
acquaintance  with  the  facts  and  circumstances  relating  to  the 
particular  case,  to  ascertain  whether  it  falls  within  or  outside 
the  general  law.  The  location  ;  the  inherent  nature  and  con- 
dition of  the  subject-matter ;  the  character  of  the  insured  for 
honesty  or  dishonesty,  negligence  or  prudence ;  the  peculiar 
temptations  to  him  in  consequence  of  business  embarrassment  or 
over-insurance  to  cause  the  event  insured  against  or  be  careless 
in  preventing  it — all  these  considerations  are  influential  in  induc- 
ing the  insurers  to  accept  or  decline  the  proposal,  or  to  accept 
it  only  at  a  special  rate  of  premium.  In  life  insurance  the 
company  desires  to  know  the  age  of  the  applicant,  his  occupa- 
tion, residence,  probable  area  of  travel,  his  health  present  and 
past,  and  also  the  healthfulness  and  longevity  of  his  parents 
and  nearest  relatives.  An  examination  made  by  the  company's 
medical  examiner  discloses  with  some  degree  of  accuracy  the 
condition  of  present  health,  but  the  other  information  is  derived 
largely  from  the  applicant  himself,  who  is  required  to  answer 
a  series  of  printed  questions  detailed  in  a  paper  called  an  appli- 
cation, which  he  is  required  to  sign.  In  fire  insurance  the  com- 
pany generally  desires  to  know — according  to  the  subject-matter 
of  the  proposed  insurance,  whether  dwelling-house,  barn,  store, 
factory,  theater,  church,  railway  cars,  etc.,  or  their  contents — 
the  location ;  the  materials  and  structure,  whether  wood,  stone, 
brick,  or  iron  ;  whether  the  roof  is  slate,  tin,  tar,  or  shingles; 
the  condition  of  flues  and  chimneys ;  whether  the  building  is 
fire-proof  or  not ;  its  relations  and  communications  with  adjoin- 
ing premises ;  whether  it  has  iron  shutters  and  iron  doors ;  the 
inflammability  of  personal  property ;  the  character  of  the  use 


16  Insurance  :    Fire,  Life,  Marine.  §  12 

and  occupation  of  the  premises  and  surroundings,  whether 
unoccupied  or  subject  to  careful  supervision ;  the  facilities  for 
extinguishing  fire;  the  efficiency  of  the  fire  department,  and 
many  other  particulars  from  which  they  may  determine 
whether  the  risk  is  a  good  one,  or  whether  it  is  hazardous, 
extra  hazardous,  specially  hazardous,  or  undesirable  at  any 
price. 

Formerly  much  of  this  information  was  obtained  from  the 
insured  by  means  of  the  written  application  containing  such 
interrogatories  as  were  appropriate  to  give  the  desired  facts. 
But  now  the  use  of  a  formal  application  is  for  the  most  part 
confined  to  Western  farm  property.  In  the  East,  and  especiallv 
in  the  cities,  the  insurers  have  come  to  rely  very  much  upon 
their  own  means  of  examination ;  and  for  use  in  the  larger 
cities  they  have  prepared  careful  insurance  maps  showing 
the  character  of  the  risk  involved  in  every  building. 

In  marine  insurance  the  rating  of  ships  and  statistics  regard- 
ing them  are  to  a  considerable  extent  a  matter  of  record,  but 
more  or  less-  information  is  often  required  by  the  insurers 
from  the  insured  in  relation  to  the  proposed  risk.  They  must 
be  advised  from  some  source  of  the  ownership,  quality,  and 
nationality  of  the  vessel,  the  course  of  the  proposed  voyage, 
the  character  of  the  captain,  the  nature  of  the  oommoditv 
carried,  the  state  of  political  relations,  and  in  time  of  wai 
whether  the  ship  is  to  sail  with  convoy. 

In  marine  insurance  the  scale  of  premiums  vaiies  very 
greatly  according  to  circumstances,  and  may  sometimes  well 
nigh  equal  the  value  of  the  insured  property.  The  subject  of 
insurance  is  sometimes  insured  "lost  or  not  lost,"  provided 
neither  party  knows  whether  the  risk  has  already  terminated. 

§  13.  Mortuary  Tables. — The  premiums  to  be  charged 
for  life  policies  are  based  upon  calculations  made  from  mor- 
tality tables,  which  are  tabulated  exhibits  of  the  number  of  sur- 
vivors and  the  number  of  those  dying  each  subsequent  year 
among  a  given  number  of  persons  taken  at  various  given  ages 
respectively.  A  considerable  number  of  such  tables  have  been 
})repared  at  different  times,  the  earliest  of  which  are  so  rough 
and  inaccurate  that  they  possess  only  a  historical  interest.  Of 
bhe  more  reliable  tables  which  have  been  in  use  in  recent  times 


§  13        Nature,  Origin,  and  Growth  of  Insurance.  17 

may  be  mentioned  the  Northampton  Table,  which  was  con- 
structed by  Dr.  Thomas  Price  from  the  registers  kept  in  the 
parish  of  All  Saints,  Northampton,  England,  for  the  forty- 
six  years,  1735  to  1780.  Another  English  table  very  exten 
sively  used  by  insurance  companies  was  the  Carlisle  Table,  con- 
structed by  JVIr.  Joshua  Milne  from  materials  furnished  by  the 
labors  of  Dr.  John  Hey  sham.  These  materials  comprised 
two  enumerations  from  the  population  of  the  parishes  of  Saint 
Mary  and  Saint  Cuthbert  Carlisle  in  1780  and  1787,  and  the 
abridged  bills  of  mortality  of  those  two  parishes  for  the  nine 
years  1779  to  1787. 

Since  then  many  mortuary  tables  have  been  prepared  in 
England  and  the  United  States,  based  upon  much  more  care- 
fully collected  statistics  and  giving  more  accurate  results.  The 
mathematics  of  the  business,  of  great  practical  consequence, 
are  managed  by  actuaries.  New  York  and  other  States  have 
adopted  the  American  Experience  Table,  with  four  and  a  half 
per  cent,  interest;  while  Massachusetts,  Connecticut,- and  other 
States  use  the  Actuaries  or  Combined  Experience  Table,  with 
four  per  cent,  interest ;  but  in  New  York  the  liabilities  of  the 
life  companies  are  now  valued  by  both  standards.  A  net 
premium  is  the  rate  at  which,  according  to  the  table  of  mortality 
and  interest,  an  insurance  could  be  effected.  But  to  this  must 
be  added  in  practice  an  important  percentage  which  is  called 
"loading,"  or  "  margin,"  in  order  to  defray  the  expenses  of  the 
business,  and  to  provide  for  a  possible  excess  of  mortality.  A 
gross  or  oflBce  premium  is  the  net  premium  increased  by  the 
loading. 

§  13.  Reserve.  —  That  portion  of  the  premiums  of  a 
policy  with  the  interest  thereon  which  is  required  to  be 
reserved  or  set  aside  as  a  fund  for  the  payment  of  the  policy 
when  it  becomes  due  is  called  the  "  reserve."  The  mean  or 
average  duration  of  the  life  of  an  individual  after  any  specified 
age,  according  to  a  given  table  of  mortality,  is  called  the  "  ex- 
pectation of  life."  Statistical  observations  on  the  duration  of 
human  life  point  to  the  conclusion  that,  after  the  period  of 
extreme  youth  is  passed,  the  death  rate  among  any  given  body 
of  persons  increases  gradually  with  advancing  age  ;  and  where 
the  annual  premium  is  fixed  at  a  uniform  rate  during  the  life 
9 


18  Insubanoe  :   Fire,  Life,  Makine.  §  14 

of  the  policy,  as  is  customary  in  life  insurance,  it  is  evident 
that  if  the  policy  is  surrendered  by  the  insured  before  its  expi- 
ration, the  insurers  can  generally  afford  to  make  a  return  of  a 
portion  of  the  premiums  which  have  been  paid.  Of  the  reserve 
value  w^hich  the  policy  is  estimated  to  have  at  the  time  of 
surrender,  a  part  called  "  the  surrender  value,"  the  company 
offers  to  pay  to  the  insured  in  return  for  the  cancellation  of 
the  policy  before  its  natural  expiration. 

From  these  same  considerations  it  appears,  also,  that  in  the 
event  of  the  insolvency  and  winding  up  of  a  life  insurance  com- 
pany, there  is  a  basis  for  calculating  the  present  value  of  the 
unexpired  policies,  by  which  an  equitable  distribution  of  assets 
may  be  made  to  all  the  policy  holders  in  accordance  with  the 
laws  of  priority. 

The  test  of  solvency  is  the  rule  which  the  insurance  de- 
partment is  required  to  apply  to  determine  the  ability  of  a 
company  to  pay  all  losses  which,  according  to  the  standard 
table  of  mortality  and  rate  of  interest,  may  occur.  The  liabil- 
ities of  a  company  consist  of  its  actual  unpaid  losses,  its 
expenses  and  contingent  obligations,  for  the  payment  of  which 
its  assets  are  held  liable.  The  whole  amount  insured  is  really 
a  contingent  obligation,  but  in  testing  the  present  solvency  of 
a  company,  this  is  regarded  as  a  liability  only  to  the  extent  of 
the  reserve  on  each  policy. 

§  14.  Different  Kinds  of  Policies. — The  forms  of 
printed  policies  of  insurance  in  use  are  varied  and  numerous. 
They  are  filled  up  in  writing  to  suit  each  particular  case,  and 
are  often  further  modified  by  special  clauses,  which  may  be 
pasted  or  attached  in  the  shape  of  printed  riders  to  the  more 
general  form. 

A  valued  policy  is  one  which  expresses  on  its  face  an  agree- 
ment that  the  subject  of  insurance  shall  be  valued  at  a  specified 
sum  ;  for  example,  a  policy  upon  "  the  ship  Argus,  valued  at 
$10,000."  Policies  upon  lives  are  almost  invariably  valued. 
Policies  upon  ships  are  generally  valued,  but  other  kinds  of 
policies  not  so  universally.  Certain  States  have  valued  policy 
laws,  but  these  are  not  to  be  commended,  because  they  impose 
too  arbitrary  a  standard,  and  may  be  used  as  an  instrument  of 
fraud. 


§  14        Nature,  Origin,  and  Growth  of  Insurance.  19 

An  open  policy  is  one  in  which  the  value  of  the  thing 
insured  is  not  agreed  upon  in  the  policy,  but  is  left  to  be  ascer- 
tained in  case  of  loss  ;  for  example,  a  policy  upon  a  house  for 
$10,000.  The  term  "  open  policy  "  or  "  running  policy  "  is 
also  employed  to  indicate  a  very  general  form  of  insurance 
frequently  used  where  the  insured  is  likely  to  effect  many  suc- 
cessive insurances  from  the  same  company.  It  covers  such 
goods,  at  such  amounts  of  insurance,  in  such  storehouses  and 
places,  or,  if  a  marine  policy,  in  such  ships,  and  at  such  rates 
of  premiums,  as  from  time  to  time  shall  be  agreed  upon  and 
indorsed  on  the  policy  or  in  a  book  attached  thereto,  the  pur- 
pose being  to  obviate  the  necessity  of  executing  a  fresh  policy 
for  every  transaction. 

A  floating  policy  is  also  a  general  form  of  insurance,  but 
usually  upon  goods  belonging  to  the  insured  within  a  certain 
specified  area  of  territory,  or  otherwise  designated,  and  is 
intended  to  cover  property  which  cannot  well  be  described 
specifically  because  of  its  fluctuating  quantity  and  location ; 
as,  for  example,  merchandise  in  freight  trains,  warehouses,  or 
lighters.  The  amount  of  goods  covered  by  such  a  policy  is 
ascertainable  at  the  moment  of  loss  only  ;  and  if  at  the  time  of 
loss  the  amount  of  goods  at  the  place  of  the  fire  exceeds  the 
amount  of  insurance,  it  is  generally  provided,  that,  for  the 
excess,  the  owner  must  be  his  own  insurer,  and  share  the  loss 
jpro  rata  with  the  insurer.  The  terms  "  open  policy,"  "  floating 
policy,"  and  "  blanket  policy,"  are  sometimes  used  indiscrimi- 
nately. 

A  time  policy^is  one  in  which  the  duration  of  the  risk  is 
defined  at  the  beginning  and  at  the  end,  by  a  fixed  date ;  as, 
for  example,  from  noon  of  January  1,  1892,  until  noon  of 
January  1,  1893. 

A  voyage  policy  is  one  in  which,  irrespective  of  time,  the 
duration  of  the  risk  is  established  by  geographical  termini ;  as, 
for  example,  from  New  York  to  Liverpool,  or  from  New  York 
to  Chicago. 

A  life  pohcy  is  one  payable  on  the  death  of  the  person 
insured.  A  term  policy  is  one  taken  for  a  limited  number  of 
years,  the  sum  insured  being  payable  only  in  case  of  the  death 
of  the  insured  during  this  period.  A  joint-life  policy  is  one 
payable  on  the  earliest  death  of  either  of  two  or  more  persons 


20  Insurance  :    Fire,  Life,  Marine.  §  16 

insured.  A  survivoi-sliij)  policy  is  one  payable  on  the  death  of 
the  survivor  of  two  or  more  persons. 

An  endowment  policy  is  one  which  is  payable  when  the 
insured  reaches  a  given  age,  or  upon  his  decease  if  that  occurs 
sooner.  A  tontine  policy  is  one  in  which  it  is  agreed  that 
certain  profits  of  the  business  shall  be  apportioned  among  those 
of  the  insured  of  a  certain  class  surviving,  at  certain  intervals; 
for  example,  every  ten,  fifteen,  or  twenty  years.  The  lapsed 
policies  of  the  class  forfeit  their  reserve  and  dividends  to  the 
survivors.  A  tontine  dividend  is  the  distribution  of  such 
profits  among  the  survivors  who  are  entitled  to  it  after  the 
given  period.  A  semi-tontine  policy  is  one  in  which  it  is  agreed 
that  the  dividends  only  shall  be  apportioned  among  the  sur- 
vivors of  the  class. 

In  the  case  of  a  mutual  company  or  benefit  society,  the  policy 
or  certificate  is  at  once  evidence  of  the  contract  and  of  the  fact 
of  membership,  and  generally  refers  to  the  by-laws  and  condi- 
tions subject  to  which  it  is  received  by  the  insured.  A  specimen 
of  the  form  of  a  certificate  of  a  benefit  society,  and  of  its  by- 
laws and  rules,  will  be  found  in  one  of  the  late  Connecticut 
cases  already  cited.^ 

§  15.  Reinsurance. — A  feature  of  insurance  business 
which  has  developed  into  great  magnitude  is  the  practice  of 
reinsurance.  Where  a  company  finds  itself  in  embarrassed 
circumstances,  or  for  any  reason  desires  to  limit  its  liability,  in 
certain  classes  of  risks,  or  in  certain  localities,  or  under  a 
particular  policy,  it  secures,  if  possible,  policies  of  reinsurance 
from  other  companies.  The  entire  business  of  an  insurance 
company  is  not  infrequently  absorbed  in  this  way  by  some 
stronger  competitor. 

§  16.  Authority  of  Insurance  Agents  to  Bind 
the  Companies. — At  least  some  general  understanding  of 
the  agency  system  employed  by  insurance  companies  in  the 
United  States  is  a  prerequisite  to  the  intelligent  consideration  of 
the  numerous  legal  questions  to  which  it  gives  rise,  and  which, 
especially  under  the  doctrine  of  waiver  and  estoppel,  assume 
»  peculiar  importance  in  the  law  of  fire  and  life  insurance. 
•  Lawler  v.  Murphy,  58  Conn.  294  (1890). 


§  17       Nature,  Origin,  and  Growth  of  Insurance.  21 

The  phraseology  used  by  the  companies  or  current  in  the 
trade  to  describe  an  insurance  agent  is  of  little  significance  in 
the  law.  The  significant  fact  to  be  ascertained  is  this,  namely, 
the  real  scope  of  the  authority  which  has  been  granted  to  him 
as  defined  by  the  requirements  of  the  act  or  the  business  which 
he  has  been  employed  by  the  company  to  do  for  it.  Within 
the  jurisdiction  of  many  courts  this  fact  is  deemed  more  con- 
trolling over  the  contract  rights  of  the  parties  than  any  general 
stipulation  regarding  the  limit  of  the  agent's  authority  con- 
tained in  the  printed  policy,  because  the  policy  in  any  event  is 
not  the  best  evidence  of  relations  existing  between  the  insur- 
ance company  and  the  persons  employed  by  it ;  and,  moreover, 
the  terms  of  the  policy  are  often  settled  by  the  agent  himself, 
who  cannot  by  his  own  acts  fix  the  extent  of  his  powers ;  and, 
finally,  the  contract  is  frequently  closed  and  the  premium  paid 
before  the  company  executes  and  delivers  the  policy. 

The  practice  of  different  companies  is  so  varied,  and  the 
authority  given  to  the  particular  agent  not  only  by  his  written 
commission  but  also  perhaps  by  an  extended  correspondence  be- 
tween himself  and  his  superiors,  or  by  a  course  of  usage  recog- 
nized by  the  company,  is  often  so  ill-defined,  that  any  brief 
classification  must  be  regarded  as  rough  and  only  approximately 
correct.  In  view  of  this  consideration  it  is  clear  that  the  facts 
of  every  case  as  it  arises  must  receive  careful  attention.  In 
this  country  the  boards  of  directors  of  insurance  companies  do 
not  as  a  rule  take  an  active  part  in  the  management  of  the 
details  of  making,  altering,  cancelling,  or  renewing  policies  of 
insurance,  or  in  adjusting  losses,  or  in  instructing  or  superintend- 
ing the  cohort  of  agents  who  are  located  outside  of  the  home 
office.  Consequently  such  duties  and  powers,  subject  to  the 
laws  of  the  land  and  to  charter  and  by-law  restrictions,  must 
become  vested  in  the  officers.  Of  the  officers,  the  president  and 
secretary  more  particularly  are  in  most  companies  considered 
amply  empowered  with  wide  discretions  in  this  regard,  and  are 
most  frequently  designated  by  the  rules  of  the  company  as  the 
proper  officials  to  sign  the  policies  of  insurance. 

§  17.  Agents  of  Life  Companies. — Agents  of  Ameri- 
can life  companies  located  outside  the  home  office  may  for  our 
present  purpose  be  divided  into  two  classes — general  agents  so 


22  Insurance  :    Fire,  Life,  Marine.  §  17 

styled  by  the  craft,  and  sub-agents.  The  first  class  are  so  called 
because  they  have  the  power  to  select  and  make  contracts  with 
sub-agents.  General  agents  are  employed  by  the  company,  and 
hold  a  contract  from  the  home  office  authorizing  them  to  can- 
vass for  insurance.  They  periodically  account  to  it  for  premiums 
collected.  Their  jurisdiction  is  generally  more  or  less  terri- 
torial. Their  instructions  do  not  permit  them  to  pass  upon 
applications  or  proposals  for  insurance,  or  to  make,  alter,  or 
discharge  policies,  or  to  grant  permits,  or  waive  forfeitures,  or 
compromise  claims.  So  far  as  any  control  over  the  terms  of 
the  contract  is  concerned,  the  intention  of  the  company  evi- 
dently is  to  restrict  their  powers  to  those  of  a  special  agency. 
But  the  business  of  general  agents,  like  that  of  other  canvassing 
agents,  is  to  solicit  custom  for  the  company ;  and  for  this  pur- 
pose they  are  furnished  with  blanks  called  applications,  contain- 
ing a  long  series  of  questions  relating  to  the  risk,  which  are  to 
be  answered  by  the  applicant  over  his  signature.  (See  form  of 
application  in  the  appendix.)  The  agent  is  expected,  on  behalf 
of  the  company,  to  interview  the  probable  applicant,  to  use  all 
proper  inducements  to  secure  him,  to  explain  what  the  com- 
pany requires,  and  also  to  write  into  the  application  the  answers 
which  the  applicant  almost  always  dictates  orally.  Sometimes 
through  fraud,  or  carelessness,  or  error  of  judgment,  the  agent 
writes  out  the  answers  in  form  and  substance  materially  differ- 
ent from  the  language  used  by  the  applicant ;  and  the  applicant, 
not  knowing  the  error,  or  supposing  that  the  agent  understands 
best  what  the  compan}^  wants,  signs  the  paper  as  it  is  prepared. 

The  application  is  then  forwarded  by  the  agent  to  the 
home  office,  and  though  if  accepted  it  becomes  an  essential  part 
of  the  contract,  and  all  its  statements  a,re  warranted  to  be  true, 
it  is  not  before  the  insured  at  the  time  the  contract  is  closed, 
nor  does  he  have  any  opportunity  of  comparing  it  with  the 
policy. 

Local  medical  examiners  have  no  authority  to  pass  upon 
applications,  but  these  are  submitted  to  the  medical  director  at 
the  home  office. 

Pending  the  action  of  the  company,  the  agent  is  allowed 
to  give  the  applicant,  on  payment  of  the  first  premium,  a  pro- 
visional memorandum  called  a  binding  receipt,  which  simply 
amounts  to  an  agreement  on  the  part  of  the  company,  that  if 


§  17        Nature,  Origin,  and  (trowtii  ok  Insurance.  23 

the  application  sliall  be  accepted  the  insurance  is  to  be  con- 
sidered binding  under  the  terms  of  tlie  usual  policy  as  of  the 
date  of  the  binding  receipt,  and  that  if  the  application  is 
rejected  the  premium  shall  be  returned.  This  practically  pro- 
vents  the  applicant  meanwhile  from  negotiating  for  the  desired 
insurance  with  another  company.  The  policy  (see  form  of 
policy  in  the  appendix)  often  provides  that  the  contract  shall 
not  be  binding  until  the  first  premium  is  paid  in  cash  ;  but  the 
company  is  sometimes  aware  that  the  agent  has  a  habit  of 
giving  credit  for  special  reasons  in  certain  instances,  on  deliver- 
ing the  binding  receipt,  thus  making  himself  responsible  for 
the  payment  of  the  premium  to  the  company.  The  general 
agent  pays  his  own  expenses,  and  receives  or  retains  a  com- 
mission on  all  premiums  collected  through  his  instrumentality, 
whether  first  or  renewal  premiums. 

Sub-agents  are  often  appointed  by  the  general  agents ;  hold 
a  contract  from  them ;  have  a  narrower  territory  to  canvass ; 
have  blank  applications  the  filling  up  of  which  they,  like  gen- 
eral agents,  superintend ;  are  not  generally  supplied  with  bind- 
ing receipts,  but  report  any  applications  and  bring  any  cash 
collected  to  the  managing  agent,  though  their  contract  gener- 
ally provides  that  they  may  pay  and  report  either  to  the  general 
agent  or  to  the  home  office.  They  pay  their  own  expenses  and 
receive  a  brokerage,  but  only  on  the  first  premium.  This  pre- 
mium is  ordinarily  paid  by  the  insured  not  to  the  sub-agent 
but  to  the  general  agent,  and  is  turned  in  by  him  to  the  com- 
pany. 

There  is  nothing  in  the  usual  course  of  business  as  trans- 
acted by  local  agents  of  life  companies,  whether  so-called 
general  agents  or  sub-agents,  from  which  any  one  dealing  with 
them  has  the  right  to  infer  that  they  possess  any  authority 
to  make  or  alter  voluntarily  the  terms  of  policies,  except,  as 
above  noticed,  in  some  instances  in  regard  to  the  method 
of  paying  premiums.  But  if  the  local  agent  of  either  class 
misstates  answers  given  to  him  to  be  written  into  the  applica- 
tion, and  if  the  applicant  cannot  read,  or  without  carelessness 
of  his  own  is  prevented  from  correcting  the  misstatement  by 
conduct  of  the  agent,  the  alleged  breach  of  warranty  based 
upon  the  misstatement  is  really  the  act  of  the  company,  and 
therefore  the  company  is  estopped,  by  what  its  agent  has  done 


24  Insurance  :    Fibe,  Life,  Marine.  §18 

within  the  scope  of  his  actual  authority,  from  claiming  that  the 
insured  is  responsible  for  the  misstatement. 

§  18.  Agents  of  Fire  Companies. — In  fire  insurance 
the  business  intrusted  to  agents  is  more  complex.  Three 
classes  of  agents  will  answer  our  present  purpose :  general 
managers,  commissioned  agents,  and  agents  for  soliciting  only 
— that  is,  for  receiving  and  forwarding  proposals. 

The  business  of  general  managers  does  not  resemble  that 
of  the  canvassing  general  agents  of  life  insurance  companies, 
though  the  latter  are  sometimes  styled  managers.  Many 
foreign  companies,  fire  and  marine,  have  general  managing 
agents  in  this  country,  and  domestic  companies  sometimes 
have  a  managing  agency  in  a  large  center  like  Chicago 
or  Boston,  though  such  agents  may  be  advertised  as  special 
agents.  The  managers  hold  a  contract  from  the  home 
oflfice,  have  wide  discretions,  and  in  the  matter  of  making, 
altering,  cancelling,  and  renewing  contracts  of  insurance,  giving 
permits,  and  adjusting  and  compromising  claims,  are  allowed 
to  stand  very  much  in  the  stead  of  oflBcers  within  the  territory 
where  they  have  jurisdiction.  In  case  of  large  losses  they 
usually  ask  for  instructions  from  the  home  office.  The  agents 
under  them,  in  some  instances,  report  to  them,  and  in  others 
report  direct  to  the  home  office. 

Commissioned  agents  hold  a  written  commission  from  the 
home  office,  granting  them  "  full  power  to  receive  proposals 
for  insurance  in  a  certain  place  and  vicinity,  to  fix  the  rates  of 
premiums,  to  receive  moneys,  and  to  countersign,  issue,  and 
renew  policies  of  insurance  signed  by  the  president  and  attested 
by  the  secretary  (or  signed  by  the  manager),  subject  to  the 
rules  and  regulations  of  the  company,  and  to  such  instructions 
as  may  from  time  to  time  be  given  by  the  officers."  Policies 
and  renewal  receipts  signed  in  blank  by  the  proper  officers  are 
furnished  them,  and  printed  forms  of  riders,  to  enable  them  to 
fix  rates  and  close  contracts  in  their  discretion,  without  con- 
ference with  the  home  office.  They  often  close  a  contract  of 
insurance  orally,  it  being  understood  that  the  usual  policy  is  to 
be  subsequently  delivered,  and  they  often  take  the  responsi- 
bility of  giving  credit  to  the  insured  for  premiums,  making 
themselves  responsible  to  the  company ;  and  of  this  custom 


§  18         Katukk,  Okigin,  and  Growth  of  Insdkanok.  25 

the  compan}^  has  knowledge.  The  officers  probably  never 
give  express  instructions  to  their  commissioned  agents  to  waive 
conditions  of  the  policy  in  any  way,  except  as  provided  by  the 
policy,  to  wit,  by  written  agreement  indorsed  thereon  (see  form 
of  policy  in  the  appendix) ;  but  the  courts  generally  hold  that 
by  virtue  of  their  apparent  authority,  such  agents  may  waive 
any  of  the  provisions  of  the  policy  by  parol,  including  the 
stipulation  that  prohibits  waivers  except  in  writing,  unless  a 
restriction  upon  their  authority  has  been  brought  to  the  atten- 
tion of  the  insured.  Where,  however,  by  the  written  form  of 
application,  if  one  is  used,  or  by  the  terms  of  the  policy  itself, 
notice  is  given  to  the  applicant  that  the  agents  have  no 
■authority  to  waive  conditions  of  the  contract  except  by 
written  agreement,  it  is  evident  that,  at  any  rate,  after 
such  notice  is  received  by  the  insured,  neither  the  osten- 
sible authority  nor  the  actual  authority  of  the  ordinary 
commissioned  agent  is  sufficient  to  enable  him  to  effect  a 
parol  waiver  of  the  conditions  of  the  policy.  In  such  a 
case,  as  a  general  thing,  any  disturbance  of  the  contract  can 
be  accomplished  b}'^  him  only  by  a  positive  act  on  his  part, 
within  the  scope  of  his  agency,  and  while  engaged  in  the 
business  of  the  company,  upon  which  an  equitable  estoppel 
against  the  company  can  be  predicated  under  a  rule  of  law 
which  overrides  the  contract.  But  to  prevent  any  misap- 
prehension, it  should  be  added  here,  that,  in  spite  of  such 
a  recital  or  stipulation  in  the  application  or  policy  of  alleged 
lack  of  power  on  the  part  of  any  of  the  officers  or  other 
representatives  of  the  company,  it  may  still  be  the  fact  that 
officers  and  managers  really  have  an  authority  sufficiently  broad 
to  enable  them  to  waive  any  o*  the  conditions  of  the  policy 
inserted  for  the  benefit  of  the  company,  including  the  very 
clause  which  purports  to  restrict  their  powers.  The  commis- 
sioned agents  within  the  scope  of  the  business  intrusted  to  them 
are  considered  general  agents,  except  as  their  power  may  be 
specifically  restricted.  Their  commission  does  not  usually,  in 
express  terms,  authorize  them  to  adjust  losses  or  compromise 
claims,  but  as  quick  settlements,  before  the  insured  have  thought 
or  talked  much  about  their  damage,  are  best  for  the  insur- 
ers, it  is  a  fact  that  the  commissioned  agents  are  generally  per- 
mitted to  settle  small  losses  in  their  discretion.     They  are  paid 


26  Instjkanoe  :    Fiee,  Life,  Makinb.  §  19 

by  deducting  a  commission  from  the  premiums  which  they 
collect. 

Agents  for  soliciting  only  are  sometimes  appointed  by  gen- 
eral agents,  but  as  a  rule  must  be  approved  by  the  manager  or 
home  office.  They  have  no  express  poAver  to  issue  or  alter  pol- 
icies, but  they  are  to  submit  the  proposals  received  by  them  to 
the  superior  authority.  Sometimes,  however,  they  are  allowed 
to  give  binding  or  interim  receipts,  which  protect  the  property 
of  the  applicant  under  the  terms  of  the  usual  policy  until  the 
application  is  accepted  or  rejected,  and  often  they  are  allowed 
to  collect  premiums  and  give  credit.  Where  a  written  applica- 
tion is  used,  the  applicant  generally  answers  the  questions 
orally,  and  the  agent  is  expected  to  fill  in  the  blanks,  and  is,  in 
fact,  intrusted  with  some  power  and  discretion  in  this  regard, 
like  other  agents  engaged  in  canvassing  for  the  benefit  of 
their  principal ;  thus  questions  of  estoppel  may  arise  like 
those  already  suggested.  After  this  paper  is  signed  by  the 
applicant,  it  is  forwarded  by  the  agent  to  the  proper  office. 

§  19.  Agents  of  Marine  Companies.^ — Some  marine 
companies  require  that  all  proposals  for  insurance  shall  be 
passed  upon  at  the  home  office.  Others  grant  this  authority 
to  their  outside  agents. 

The  applicant  often  fills  up  the  blanks  of  a  short  printed 
form  with  a  few  essential  particulars  describing  the  subject  of 
the  proposed  insurance,  and  sends  it  to  the  company  as  a  note 
of  inquiry,  with  a  request  to  the  company  to  name  a  rate,  and 
the  statements  contained  in  the  note  of  inquiry  sometimes 
serve  as  the  representations  upon  which  the  insurance  is  based. 

Marine  insurances  are  generally  closed  in  this  country  by 
binding-slips,  and  often  through  the  intervention  of  agents  or 
brokers,  or  both.  In  London  and  in  many  other  places  the 
custom  is  for  the  broker  to  give  a  credit  to  the  insured  for  the 
premium,  and  for  the  company  to  give  credit  to  the  broker. 
In  that  event  the  policy  becomes  binding  upon  its  delivery, 
irrespective  of  the  actual  payment  of  the  premium.  In  Great 
Britain,  by  the  Stamp  Act,  a  valid  marine  insurance  can  be 
effected  only  by  a  written  policy ;  but  in  case  of  alleged  error 
in  the  policy,  the  binding-slip  is  admissible  in  evidence  to  shed 
fight  upon  the  probable  intent  of  the  parties. 


CHAPTEK  II. 


GENERAL    PKINCIPLK8. 


Nature  of  the  Gonl/ract. 

%  20.  Indemnity. — The  controlling  principle  underlying 
the  contract  of  insurance  is  indemnity.  The  agreement  is 
aleatory  or  speculative  in  one  sense ;  that  is,  the  parties  may  not 
know  whether  the  event  insured  against  will  occur  or  not :  but 
compensation  and  not  profit  must  be  aimed  at,  and  consequently 
the  party  insured  must  have  at  least  an  appreciable  pecuniary 
interest  in  the  subject  of  insurance,  or  else  the  contract  will  be 
altogether  void.^ 

Hence,  it  follows  that  the  sum  named  in  the  policy  is  not  the 
measure  but  the  limit  of  recovery,  and  this  is  true  whether 
there  are  successive  losses  or  only  one  loss  under  the  policy ; 
and  if  the  property  is  injured  without  total  destruction,  no  matter 
how  large  the  amount  of  insurance,  the  recovery  is  limited  to  the 
loss  actually  sustained.  The  principle  that  the  contract  of  in- 
surance is  one  of  indemnity  is  in  practice  subjected  to  various 
modifications  and  limitations,  which  will  presently  be  noticed. 
Such  modifications  have  been  engrafted  upon  the  general  rule 
largely  out  of  regard  to  convenience.  Thus  the  parties  are  per- 
mitted to  agree  in  advance  upon  the  value  ^  of  the  subject  of 
insurance  by  a  valued  policy,  which  in  case  of  total  loss  is  then 
conclusive  evidence  of  the  value,  in  the  absence  of  fraud  or  an 
intent  to  evade  the  law,  although  in  fact  the  estimated  value 
may  be  erroneous  ;  but  this  infringement  upon  the  strict  theory 
of  indemnity  is  of  great  practical  convenience,  for  often  the 

'  Halford  v.  Kymer,  10  B.  &  C.  725.  » Irving  v.  Manning,  6  C.  B.  391. 
Commonwealth  Ins.  Co.  vv  Sennett,  37  Valued  policy  conclusive  unless  fraud- 
Pa.  St.  205;  78  Am.  Dee  418.  Eager  ulent.  Patapsco  Ins.  Co.  v.  Biscoe, 
T.  Atlas  Ins.  Co..  14  Pick.  141  ;  25  7  Gill.  &  J.  293;  s.  c.  28  Am.  Deo. 
Am.  Dec.  863.  219. 


28  Insurance  :   Fire,  Life,  Marine.  §  21 

casualty  which  destroys  the  insured  property  destroys  with  it 
the  best  evidence  of  its  value.  Accordingly,  some  of  the  States 
have  passed  valued  policy  laws  applicable  to  realty,  which  pro- 
vide that  in  the  absence  of  fraud  the  value  of  the  building  writ- 
ten  in  the  policy  shall  be  taken  to  be  its  true  value  and  the 
amount  of  loss  where  the  building  is  wholly  destroyed.  These 
laws  are  not  to  be  commended,  however,  although  it  is  said 
that  they  are  not  intended  to  disturb  the  general  doctrine  of 
indemnity.' 

The  rule  requiring  an  insurable  interest  to  give  support  to 
the  contract  is  grounded  upon  the  most  important  considera- 
tions of  public  policy,  and  has  for  many  years  been  recognized 
as  reasonable  and  expedient  by  all  the  courts.  Wager  contracts 
of  insurance  were  at  one  time  tolerated  in  England,  but  were 
forbidden  by  two  statutes,  applicable  to  marine  and  life  policies 
respectively  (19  Geo.  II.  c.  37 ;  14  Geo.  III.  c.  48). 

The  preamble  of  the  former  statute  is  as  follows :  "  Where- 
as it  hath  been  found  by  experience  that  the  making  of  assur- 
ances, interest  or  no  interest,  or  without  further  proof  of  interest 
than  the  policy,  hath  been  productive  of  many  pernicious  prac- 
tices whereby  great  numbers  of  ships  with  their  cargoes  have 
either  been  fraudulently  lost  and  destroyed  or  taken  by  the 
enemy  in  time  of  war,  and  such  assurances  have  encouraged 
the  exportation  of  wool  and  the  carrying  on  of  many  other 
prohibited  and  clandestine  trades,"  etc. 

In  most  of  the  States  of  the  Union  there  are  statutes  against 
wagering  contracts,  and  no  excuse  can  be  found  in  our  day  for 
doing  away  with  the  wholesome  rule  that  insurance  must  be 
for  indemnity  and  not  for  betting,  notwithstanding  a  recent 
writer  advances  the  contrary  view.'^  A  wager  policy  is  more 
to  be  condemned  than  an  ordinary  wager,  for  it  is  not  only  at 
variance  with  sound  business  ethics,  but  it  also  offers  peculiar 
inducements  to  the  insured  to  bring  about  fraudulently  the 
event  insured  against. 

§  21.  Insurance  does  not  always  Grant  Full  In- 
demnity.— Only  such  damages  as  are  caused  proximately 
by  the  specified  perils  are  covered  by  the  policy.     This  rule, 

*  Ampleman  v.  Citizens  Ins.  Co. ,  35  Ma  App.  808k 

•  Ckwke  on  Life  Ins.,  §§  58,  69. 


§  22  How  Fab  a  Contract  of  Indemnitt.  99 

also,  is  grounded  upon  considerations  of  utility,  and  ordinarily 
limits  the  scope  of  the  contract  because  of  the  inconvenience 
of  attempting  to  form  an  estimate  after  loss  of  the  extent  of 
remote,  uncertain,  and  fluctuating  elements  of  damage.  Thus 
the  incidental  loss  of  trade,  or  of  the  use  of  a  building  or  ship 
while  being  repaired,  or  of  prospective  profits,  or  Siixy  pretiurr* 
affectionis  attaching  to  the  property  destroyed,  is  too  remote, 
and  is  not  supposed  to  enter  into  the  calculation  of  the  con- 
tracting parties.  Where,  however,  the  parties  do  in  fact  ex- 
pressly take  into  their  account  these  more  remote  items  of 
damage,  they  may  make  them  the  subject  of  a  valid  insurance. 
Thus  the  loss  of  use  and  occupation  or  of  expected  profits  may 
be  specifically  insured  as  such,  and  frequentl}'^  is.  In  marin? 
insurance  profits  are  generally  added  in  the  shape  of  a  per- 
centage to  the  value  of  the  goods. 

What  results  of  fire  and  marine  casualties  are  proximate, 
and  what  are  remote,  will  be  considered  under  the  clauses  of 
the  policies. 

§  33.  Insurance  Grants  Indemnity  for  Results 

of  Negligence. — Where  the  loss  is  caused  proximately  by 
the  peril  insured  against,  the  fact  that  the  negligence  of  the 
insured  or  his  agent  contributed  to  the  disaster  will  not  deprive 
him  of  the  protection  of  his  policy  ;  because  it  is  of  the  nature 
and  purpose  of  insurance  to  grant  indemnity  for  the  results  of 
carelessness  as  well  as  of  accident.  This  rule,  as  originally 
adopted  by  the  courts,  was  somewhat  arbitrary,  but  is  also 
eminently  just  and  sensible.* 

In  the  case  of  fire  insurance,  for  example,  the  security  oJBfered 
0  the  insured  by  his  policy  would  be  seriously  impaired  if  it 
were  open  to  the  insurers  to  plead  in  defense  contributory 
negligence  on  the  part  of  the  insured  or  his  servants  ;  for  many 
if  not  most  fires  have  their  origin  in  some  act  of  carelessness. 
Accordingly  the  insured  has  the  right  to  look  to  the  company 
for  indemnity  notwithstanding  any  amount  of  carelessness  in 
occasioning  the  loss,  provided  it  does  not  involve  an  element 
of  evil  design,  or  illegality,  or  a  violation  of   some   contract 

'Mathews  v.  Howard  Ins.  Co.,  11  Adams,  123  U.  S.  67.  Gore  v.  Far- 
N.  Y.  21.  Union  Ins.  Co.  v.  Smith,  mers'  Mut.  Fire  Ins.  Co.,  48  N.  H.  41; 
m  U  S.   405.     Orient  Ins.   Co.  v.     87  Am.  Dec.  573. 


80  Insurance:   Fire,  Life,  Makinb.  §  2b 

obligation  on  his  part,  and  provided  tiie  loss  is  the  proximate 
result  of  the  peril  insured  against. 

This  consideration,  however,  will  not  avail  to  excuse  a 
breach  of  warranty,  imposed  upon  the  insured  by  the  contract, 
which  has  been  brought  about  by  the  negligence  of  himself  or 
his  agent ;  as,  for  example,  a  violation  of  the  implied  or  express 
warranty  that  the  ship  must  be  seaworthy  at  the  commence- 
ment of  the  voyage.  Nor  will  it  relieve  the  insured  from  the 
obligation  of  any  other  engagements  of  the  contract;  as  where 
in  the  accident  policy  it  is  provided  that  the  insurers  shall  be 
exempt  for  losses  caused  by  voluntary  exposure  to  unnecessary 
risk ;  or  where  in  the  fire  policy  it  is  stipulated  that  the  com- 
pany shall  not  be  liable  for  loss  caused  by  neglect  of  the  in- 
sured to  use  reasonable  means  to  save  the  property  at  and  after 
a  fire.^ 

§  33.  Rule  of  Indemnity  Qualified  in  Marine : 
Insured  a  Co-insurer. — In  case  of  a  partial  loss,  the  rules 
of  recovery  apphcable  to  fire  and  marine  insurance,  respec- 
tively, differ  in  a  very  important  particular.  In  fire  the  in- 
sured recovers  his  damage  up  to  the  amount  of  the  policy; 
but  in  marine,  when  the  insurance  is  short,  the  insured  re- 
covers only  such  proportion  of  the  amount  insured  as  the 
loss  bears  to  the  value  of  the  whole  interest  of  the  insured  in 
the  property.  This  limits  a  recovery  unless  the  property  is 
fully  insured.' 

Thus  if  a  man  takes  out  an  open  fire  policy  for  $5,000  on 
his  furniture  worth  $10,000,  and  a  loss  of  $2,500  occurs,  he 
will  recover  his  loss  in  full;  but  if  he  has  an  open  marine 
policy  for  $5,000  on  his  cargo  worth  $10,000,  to  which  a  loss 
of  $2,500  occurs,  he  will  recover  only  $1,250. 

Sometimes  by  the  attachment  of  a  co-insurance  clause  the 
fire  policy  is  made  to  resemble  the  marine  contract  in  that 
respect.  Otherwise  in  fire  insurance  where  the  property  is 
only  partially  covered  by  insurance,  the  insured  recovers  in 
case  of  partial  loss  under  the  policy  as  much  as  though  he  had 

'  Richelieu  &  Ont.    Navigation  Co.         '  Nicolet  v.  Ins.  Co.,  3  La.  866;  23 
T.  Boston  Marine  Ins.  Co.,  136  U.  S.     Am.  Dec.  458. 
408.     Whitney  v.  Ocean  Ins.   Co.,   14 
La.  486;  83  Am.  Dec.  695. 


§  25  Subrogation.  31 

been  paying  premiums  for  full  insurance,  whereas  in  reality  he 
has  only  been  paying  premiums  for  part  insurance. 

§  24.  Double   Insurance   Contribution,— Growing 

out  of  the  doctrine  of  indemnity  is  another ;  namely,  that 
where  different  policies  exist  on  the  same  insurance,  subject 
and  risk,  the  co-insurers  stand  somewhat  in  the  attitude  of  co- 
sureties toward  one  another,  to  this  extent,  that  each  insurer 
in  fire  insurance  must  contribute  ratably  toward  the  loss  with- 
out regard  to  the  dates  of  the  several  policies — assuming,  of 
course,  that  the  policies  are  subsisting  at  the  time  of  loss. 
Except  for  the  usual  contract  limitation  called  the  pro  rata 
clause,  the  insured  might  recover  his  loss  in  full  against  any 
of  the  co-insurers,  but  not  exceeding  the  amount  of  the  policy, 
leaving  the  insurers  to  apportion  the  loss  by  subsequent  con- 
tribution among  themselves.^ 

The  rule  of  double  insurance  contribution  in  marine  insur- 
ance as  applied  in  America  is  quite  different,  and  is  founded 
upon  the  theory  that  policies  attach  in  the  order  of  their  date. 
This  rule  will  be  considered  in  discussing  the  clauses  of  the 
marine  policy. 

§  35.  Subrogation. — Another  corollary  incident  to  the 
doctrine  of  indemnity  is  that  of  subrogation.  Upon  paying 
the  loss  under  a  policy  the  insurer  becomes  subrogated  pro 
tanto  to  such  rights  and  remedies  as  the  insured  may  have 
against  any  third  persons  who  are  primarily  liable  to  him  for 
his  damage  sustained. 

This  rule  likewise  grows  out  of  the  principle  that  insurance 
is  designed  to  protect  the  insured  from  loss,  and  not  to  be  the 
occasion  of  gain  to  him.  Otherwise  the  insured  on  pursuing 
his  double  remedy  might  be  indemnified  twice  over,* 

The  United  States  Supreme  Court  says :  "•  In  fire  insurance, 
as  in  marine  insurance,  the  insurer,  upon  paying  to  the  assured 
the  amount  of  a  loss  of  the  property  insured,  is  doubtless  sub- 
rogated in  a  corresponding  amount  to  the  assured's  right  of 

•  Wiggln  V.Suffolk  Ins.  Co.,  18  Pick.  381.  Jackson  Co.  v.  Boylston  Mut. 
145.  Lucas  v.  Jefferson  Ins.  Co.,  6  Ins.  Co.,  139  Mass.  510.  Liverpool 
Cow.  635.      Note  in  28  Am.  Dec.  121.  &  G.  W.  Steam.  Co.  v.   Phenix  Ins. 

♦  Castellain  v.  Preston,  11  Q.  B.  D.  Co.,  129  U.  S.  897. 


82  Insurance  :   Fike,  Life,  Marine.  §  25 

action  against  any  other  person  responsible  for  the  loss.  But 
the  right  of  the  insurer  against  such  other  person  does  not  rest 
upon  any  relation  of  contract  or  of  privity  between  them.  It 
arises  out  of  the  nature  of  the  contract  of  insurance  as  a  con- 
tract of  indemnity,  and  is  derived  from  the  assured  alone,  and 
can  be  enforced  in  his  right  only.  By  the  strict  rules  of  the 
common  law,  it  must  be  asserted  in  the  name  of  the  assured. 
In  a  court  of  equity  or  of  admiralty,  or  under  some  State 
codes,  it  may  be  asserted  by  the  insurer  in  his  own  name  ;  but 
in  any  form  of  remedy  the  insurer  can  take  nothing  by  subro- 
gation but  the  rights  of  the  assured,  and  if  the  assured  has 
no  right  of  action  none  passes  to  the  insurer."  * 

Thus  if  a  common  carrier  carelessly  starts  a  fire  by  sparks 
from  a  locomotive,  which  burns  the  property  of  the  insured, 
the  insurer  upon  paying  the  loss  under  the  policy  becomes  sub- 
rogated to  the  right  of  recourse  which  the  insured  had  against 
the  common  carrier.  The  latter  must  not  be  exonerated  or 
released  without  the  consent  of  the  insurer.^ 

A  release  given  to  the  negligent  party  by  the  insured  with- 
out the  consent  of  the  insurer  will  in  such  a  case  bar  his  right 
of  action  upon  the  policy.' 

If  the  w^rong-doer  pays  the  assured  after  the  insurers  have 
made  a  payment  under  the  policy,  it  is  a  fraud  upon  the  latter, 
provided  the  wrong-doer  has  knowledge  of  the  fact,  and  will 
not  protect  him  from  liability  to  the  insurers.  If  the  insurers, 
after  payment  of  the  damage  by  the  wrong-doer  to  the  insured, 
voluntarily  pay  the  policy,  they  cannot  maintain  an  action 
against  the  wrong-doer  ;  and  if  the  assured  receives  his  damages 
from  the  wrong-doer  before  payment  is  made  by  the  insurers 
under  the  policy,  the  amount  so  received  will  be  applied  jpro 
tanto  in  discharge  of  the  policy.* 

Inasmuch  as  the  insurers  are  only  entitled  to  such  rights  as 
are  vested  in  the  insured,  there  will  be  no  subrogation  in  case 
the  insured  has  stipulated  in  a  bill  of  lading  from  the  common 
carrier  that  the  latter  shall  have  the  benefit  of  insurance ;  and 

'  St.  Louis,  I.  M.  &  S.  Railway  Co.  '  Billing  v.  Draemel,  16  Daly,  104 

r.   Commercial   Union   Ins.    Co.,   139  (1890).     Hall   v.    The  Railroad   Com- 

U.  S.  235.  panies,  13  Wall.  367. 

*  Newcomb  V.  Cincinnati  Ins.  Co..  22  *  Conn.  Fire  Ins.  Co.  v.  Erie  Ry. 

Ohio  State,  382  ;  s.o.  10  Am.  Eep.  746.  Co.,  73  N.  Y.  399. 


§  26  Insurable  Interest.  38 

in  case  the  insured  has  been  so  imprudent  as  to  agree  to  give 
the  insurers  the  benefit  of  subrogation,  and  has  also  made  an 
inconsistent  stipulation  with  the  common  carrier,  he  may  find 
himself  without  security  for  his  loss.^ 

Similarly,  where  a  mortgagee  has  taken  out  a  policy  for  his 
own  benefit,  and  not  for  the  benefit  of  the  mortgagor,  upon  the 
property  of  the  mortgagor  covered  by  the  mortgage,  it  is  held 
by  the  better  authority,  that,  even  in  the  absence  of  an  express 
provision  to  that  effect  in  the  policy,  the  insurer  upon  paying 
the  mortgagee  the  insurance  money  becomes  subrogated  jpro 
tanto  to  the  mortgage  security  as  against  the  mortgagor.^ 

But  where  the  mortgagor  has  any  interest  in  the  policy, 
either  by  payment  of  premiums  or  by  agreement  with  the 
mortgagee,  then  there  will  be  no  subrogation  in  favor  of  the 
insurers,  for  the  latter  take  only  such  rights  as  the  assured  can 
give.^ 

A  mortgagee  is  not  required  to  exhaust  his  remedy  upon 
the  mortgage  before  enforcing  his  policy,  and  he  can  maintain 
his  action  on  the  policy  although  the  property  after  the  fire  is 
still  equal  in  value  to  the  amount  of  the  mortgage  debt.^ 

In  case  the  insured  under  a  life  policy  is  killed,  or  in  case 
property  of  the  insured  under  a  fire  policy  is  feloniously  de- 
stroyed, no  right  of  subrogation  exists  in  favor  of  the  insurers.* 

§  36.  Insurable  Interest :  Fire. — Every  interest  in 
property,  or  in  relation  thereto,  or  liability  in  respect  thereof, 
of  such  a  nature  that  a  contemplated  peril  might  directly 
damnify  the  insured,  is  an  insurable  interest. 

A  learned  justice  of  the  New  York  Court  of  Appeals,  who 
has  made  the  subject  of  insurance  law  his  profound  study,  states 
the  rule  in  the  following  words: 

"  It  would  seem,  therefore,  that  whenever  there  is  a  real  in- 
terest to  protect,  and  a  person  is  so  situated  with  respect  to  the 
subject  of  insurance  that  its  destruction  would  or  might  reason- 

'  Piatt  V.  Richmond.  Y.R.  &  C.  R.R.  '  Kemochan  v.  N.  Y.  Bowery  Fire 

Co.,  108  N.  Y.  358.     Fayer weather  v.  Ins.   Co.,  17  N.  Y.  441.     Louden  v. 

Phenix  Ins.  Co..  118  N.  Y.  324.  Waddle,  98  Penn.  State,  242. 

^  Carpenter     v.     The      Providence  *  Excelsior   Fire   Ins.  Co.  v.  Royal 

Washington  Ins.  Co..  16  Peters,  495.  Ins.  Co.,  55  N.  Y.  343. 

Contra,    International   Trans.  Co.  v.  '  Ins.  Co.  v.  Brame,  95  U.  S.  704. 
Boardman,  149  Mass.  158. 
3 


34  Insurance  :    Fire,  Life,  Marine.  §  26 

ably  be  expected  to  impair  the  value  of  that  interest,  an  insur- 
ance on  such  interest  would  not  be  a  wager  within  the  statute, 
whether  the  interest  was  an  ownership  in,  or  a  right  to  the 
possession  of  the  property,  or  simply  an  advantage  of  a  pecuni- 
ary character  having  a  legal  basis,  but  dependent  upon  the 
continued  existence  of  the  subject.  It  is  well  settled  that  a 
mere  hope  or  expectation,  which  may  be  frustrated  by  the  hap- 
pening of  some  event,  is  not  an  insurable  interest."  ^ 

An  insurable  interest  may  be  legal  or  equitable,  vested  or 
contingent.^  It  may  be  an  existing  interest — as,  for  example,  the 
ownership  in  fee,  or  for  life,  or  for  years,  or  a  right  by  mortgage 
or  other  lien — or  it  may  be  merely  an  inchoate  interest,  like  a 
ship-owner's  riglit  to  freight  on  goods  laden  on  his  ship,  or  the 
equitable  right  to  a  title  under  an  executory  contract  of  pur- 
chase,^ or  an  interest  in  expected  profits  on  goods  consigned  for 
sale.^  A  tenant  by  curtesy  or  dower  may  insure.^  The  interest 
may  arise  from  some  title  to  the  property  or  from  a  mere 
liability  in  respect  to  the  property.  An  insured  owner  of 
property  does  not  lose  his  insurable  interest  by  giving  a  lease 
or  a  mortgage,^  or  making  an  executory  contract  to  sell  the 
property,''  or  even  by  a  foreclosure,  so  long  as  any  title  or 
equitable  right  to  the  property  remains  in  him.^  And  although 
his  title  to  the  insured  property  may  be  defective  or  voida- 
ble, it  may  still  be  the  basis  of  a  valid  insurance.^  But  a  mere 
contingent  or  expectant  interest  in  anything,  not^Jounded 
upon  an  actual  right  to  a  thing,  nor  upon  any  valid  con- 
tract for  it,  is  not  insurable.  Lord  Eldon  illustrates  this 
distinction  in  an  elaborate  opinion  upon  marine  insurance, 
where  the  same  general  doctrine  prevails.  "  Suppose  A  to  be 
possessed  of  a  ship  limited  to  B  in  case  A  dies  without  issue  ; 

'  Riggs    V.  Commercial    Mut.  Ins.  "  Franklin  Fire  Ins.  Co.  v.  Drake,  2 

Co.,  125  N.   Y.   12,   by  Andrews,  J.  B.  Mon.  (Ky.),  47. 

Williams    v.    Roger     Williams    Ins.  «  H  ubbard  v.  Hartford  Fire  Ins.  Co. , 

Co.,  107  Mass  377.  33  Iowa,  825. 

^  Fenn  v.  New   Orleans  Mut.  Ins.  '  Davis  v.  QuincyMut.  Fire  Ins.  Co., 

Co.,  53_Ga^578.     Nat.   Filtering  Oil  10  Allen,  118. 

Co.  V.  Citizens  Ins.  Co.,  106  N.  Y.  535.  "Strong    v.    Manufs.   Ins.    Co.,    10 

•  Brogden  v.  Manufs.  &  M.  Mut.  Pick.  40.  Essex  Savings  Bank  v. 
Fire  Ins.  Co.,  15  Can.  L.  J.  31.  ^tna  Meriden  Fire  Ins.  Co.,  57  Conn.  335 
Fire  Ins.  Co.  v.  Tyler,  16  Wend.  385.  -1889). 

*  French  v.  Hope  Ins.  Co.,  16  Pick.  "  Curry  v.  Commonwealth  Ins.  Co., 
897.  10  Pick.  535. 


§  26  Insurable  Interest.  36 

that  A  has  twenty  children,  the  eldest  of  whom  is  twenty  years 

of  age ;  and  B  is  ninety  years  of  age ;  it  is  a  moral  certainty  that 
B  will  never  come  into  possession,  yet  this  is  a  clear  interest. 
On  the  other  hand,  suppose  the  case  of  the  heir-at-law  of  a  man 
who  has  an  estate  worth  £20,000  a  year,  who  is  ninety  years 
of  age,  upon  his  death-bed,  intestate,  and  incapable  from  incur- 
able lunacy  of  making  a  will,  there  is  no  man  who  will  deny 
that  such  an  heir-at-law  has  a  moral  certainty  of  succeeding  to 
the  estate ;  yet  the  law  will  not  allow  that  he  has  any  interest, 
or  anything  more  than  a  mere  expectation."  ^ 

It  would  be  dijBBcult  to  enumerate  all  the  classes  of  persons 
who  may  have  an  insurable  interest  in  property  their  own,  or 
held  by  them  for  others,  or  to  which  they  have  some  right. 
Among  them  may  be  named  owners,  trustees  and  cestuis  que 
trusty  executors  and  administrators,  co-partners,  consignees, 
factors,  agents,  mortgagors  and  mortgagees,  lienors,  vendors 
and  vendees,  lessors  and  lessees,  sureties,  indorsers,  common 
carriers,  warehousemen,  wharfingers,  innkeepers,  pledgees,  and 
depositaries  generally,  stockholders  in  property  of  the  corpo- 
ration, and  creditors  and  sheriffs  in  property  attached.^ 

A  mere  trespasser  or  intruder,  or  one  who  has  no  color  of 
title  to  property,  has  no  insurable  interest  in  it ;  ^  and  it  has 
also  been  held  that  a  creditor  at  large,  having  no  specific  lien 
upon  the  propert}'"  of  his  debtor,  has  no  insurable  interest  in 
such  property.*  Whether  a  judgment  creditor  has  an  insura- 
ble interest  before  an  attachment  or  levy  upon  his  debtor's 
property,  is  open  to  question.  On  principle,  as  well  as  on  the 
authority  of  a  New  York  case,  it  would  seem  that  he  has.^ 
But  the  question  is  probably  of  no  great  practical  importance, 
for  an  insurer  would  not  be  apt  to  take  such  a  risk. 

From  the  list  just  enumerated,  the  fact  will  be  inferred  that 
the  same  person  may  have  different  insurable  interests  in  the 
same  property,  and  also  that  different  persons  may  have  sepa- 
rate insurable   interests   in   the   same   property.^    Where  the 

'  Lucena  v.  Craufurd,  3  B.  &  P.  N.  *  Grevemeyer  v.  Southern  Mut.  Ins. 

R.  324.  Co.,  62  Pa.  St.  340 

'  Strong  V.  Mfrs.  Ins.  Co.,  10  Pick.  ^  Rohrback  v.  Germania  Fire  Ins. 

40  ;  s.  c,  20  Am.  Dec.  507,  note  510-  Co.,  62  N.  Y.  47. 

518.  "  Ins.  Cos.  V.  Thompson.  95  U.  S. 

'  Sweeny  v.  Franklin   Ins.  Co.,  20  547.    Carruthers  v.  Sheddon,  6  Taunt. 

Pa.  St.  337.  14. 


86  Insuranoi-  :   Firk,  Ltfk,  Marine.  §  21 

insured  is  jointly  interested  with  others,  as  in  the  case  of  co- 
partners or  trustees,  or  where  he  is  intrusted  with  goods  of 
other  persons,  as  in  the  case  of  a  common  carrier  or  warehouse- 
man or  factor,  he  may  either  insure  his  own  interest,  or  his 
own  habihty  in  respect  to  the  property,  or  he  may  insure  the 
property  to  its  full  value  for  the  benefit  of  all  concerned.^ 

§  27.  Insurable  Interest :  Life. — Every  person  has 
an  insurable  interest  in  the  life  and  health  of  himself,  of  any 
person  on  whom  he  depends  wholly  or  in  part  for  education 
or  support,  of  any  person  under  a  legal  obligation  to  him  for 
the  payment  of  money,  or  respecting  property  or  services  of 
which  death  or  illness  might  delay  or  prevent  the  performance, 
and  of  any  person  upon  whose  life  any  estate  or  interest  vested 
in  him  depends.'^ 

Thus  a  partner  has  an  insurable  interest  in  the  life  of  a 
co-partner,^  a  creditor  of  a  co-partnership  in  the  life  of  each  co- 
partner,^ and  all  creditors  in  the  lives  of  their  debtors.^  This  is 
true,  although  the  debt  is  voidable,^  or  not  enforcible  on  account 
of  the  Statute  of  Limitations.'^  A  clerk  has  ar  insurable  inter- 
est in  the  life  of  his  employer,  and  a  master  m  the  life  of  his 
servant  if  he  has  a  legal  claim  to  his  seivices.^  A  woman  in 
the  life  of  her  fiance.^  A  surety  on  a  bond  in  the  life  of  the 
principal.^''  A  creditor  of  an  infant  for  necessaries  sold  to  the 
infant  has  an  insurable  interest  in  his  life."  A  voidable  note 
given  for  a  debt  contracted  during  the  minority  of  the  debtor 
is  sufl&cient  to  give  an  insurable  interest,  because  the  infant 

'  Fire  Ins.  Asso.  v.  Merchants,  &c.,  *  Goodwin  v.  Mass.  Mut.  Life  Ins. 

Trans.  Co.,  66  Md.   339.     Waters  v.  Co.,  73  N.  Y.  480. 

Assurance  Co.,  5  E.  &  B.  870.  "  Rivers  v.  Gregg,  5   Rich.  Eq.  274. 

«  Bevin  v.  Conn.  Mut.  L.  Ins.  Co  ,  '  Rawls  v.    Araer.    Mut.    Life    Ins. 

28  Conn.  244.  Morrell  v.  Trenton  Mut.  Co.,  27  N.  Y.  282  ;  s.c,  84  Am.  Dec. 

Ins.    Co..    10    Cush.    282.     Baker  v.  280. 

Union  Mut.  L.  Ins.  Co.,  43  N.  Y.  283.  "  Hebdon  v.  West,  3  Best  &  Smith, 

Thompson  v.  American,  &c.,  Ins.  Co.,  578. 

46  N.  Y.  674.      Warnock  v.  Davis,  104  "  Chisholm  v.  National  Capitol  Life 

U.  S.  775.     Wright  v.  Mutual  Ben.  Ins.    Co.,  52  Mo.  213  ;  s.  c,  14  Am. 

Life  Assn..  118  N.  Y.  237.  Rep.  414. 

'  Conn.  Mut.  Life  Ins.  Co.  v.  Luchs,  '"  Ilebdon  v.  West,  3  Best  &  Smith, 

108  U.  S.  498.  579.    Branford  v.  Saunders,  25  Weekly 

*  Morrell  v.  Trenton  Mut.  L.  and  F.  Reporter,  650. 

Ins.  Co.,  10  Cush.  282;   s.c,  57  Am.  "Rivers  v.    Gregg,    5    Rich.    Eq. 

Dec.  92.  274. 


§  28  Insurable  JiNtkrest.  37 

alone  can  avoid  the  note.^  Ties  of  affection  or  kinship  do  not 
of  themselves  constitute  an  insurable  interest.  Thus  an  adult 
son  has  no  insurable  interest  in  the  life  of  his  father  simply  by 
virtue  of  the  relationship.^  Nor  a  nephew  in  the  life  of  an 
uncle.^  Noi  a  son-in-law  in  the  life  of  a  mother-in-law.^  Nor 
a  brother  in  the  life  of  a  brother.^  But  certain  relationships 
are  so  apt  to  involve  a  legal  claim  to  support  or  pecuniary  ob- 
ligation or  advantage  that  their  existence  is  held  to  establish 
conclusively  an  insurable  interest.^ 

Thus  a  wife  has  an  insurable  interest  in  the  life  of  her  hus- 
band, and  the  validity  of  the  policy  will  survive  a  divorce.'^ 
And  the  illegality  of  the  marriage  will  not  defeat  it.^  And, 
ordinarily,  at  least,  a  husband  has  an  insurable  interest  in  the 
life  of  his  wife.®  And  a  father  in  the  life  of  his  minor  son.^" 
Any  element  of  dependency  coupled  with  the  relationship 
will  furnish  the  basis  for  an  insurable  interest.  Thus  where 
the  brother  had  supported  and  educated  his  sister  it  was  held 
that  she  had  an  insurable  interest  in  his  life." 

The  interest  which  one  has  in  his  own  life,  being  incapable 
of  exact  pecuniary  estimate,  may  be  valued  at  any  amount 
which  the  parties  agree  upon,  and  so  generally  of  all  insurable 
interests  which  are  founded  upon  relationship ;  '^  but  if  a  credi- 
tor takes  out  an  insurance  upon  the  life  of  the  debtor  greatly 
in  excess  of  any  loss  that  he  could  sustain  by  the  death  of  the 
insured,  the  transaction  may  be  held  to  amount  to  a  wager. ^^ 

§  38.  Insurable  Interest :  Marine. — The  same  gen- 
eral principles  are  applicable  as  in  fire  insurance.     Thus  the 

'  Dwyer  v.  Edie,  Park  on  Ins.  433.  "  Equitable  Life  Ass.  So.  v.  Pater- 

2  Guardian   Mut.  L.  Ins.  Co.  v.  Ho-  son,  41j&a.  338  ;  s.c..5  Am.  Rep.  535. 

gan,  80  111.  35  ;  s.  o. ,  32  Am.  Rep.  180.  "Currier   v.  Continental    Life   Ins. 

»  Mowry  v.  Home  Life  Ins.  Co.,  9  R.  Co.,  57  Vt.  496. 

I.  346.  ">  Mitchell  v.  Union  Life  Ins.  Co., 

*  Rombach   v.  Piedmont  &  A.   Life  45  Me.  104  ;  s.  e.,  71  Am.  Dee.  529. 
Ins.  Co.,  35  La.  Ann.  233;  s.c.,  48  Am.  "  Lord  v.  Dall,  13  Mass.  115  ;  s.  c, 
Rep.  239.  7  Am.  Dec.  38. 

*  Lewis  V.   Phojnix   Mut.    Life   Ins  "^  Bevln   v.    Corm.    Mut.    Life  Ina. 
Co.,  39  Conn.  10  ■  Co.,  23-Conn.  241. 

•Corson's  Appeal.  113  Pa.  St.  438.  "  Fox  v.  Penn.  Mut.  Life  Ins.  Co., 

'  Conn.     Mat      Life     Ins.     Co.     v.  4  Big.  Ins.  (.'as.  458.     Grant  v.  Elline, 

Schaefer.    94   U.   S.    460.      Baker    v.  115  Pa.  St.  618. 

Union  Mut.  L.  Ins.  Co.,  43  N.  Y.  283. 


88  Insurance:   Fire,  Life,  Marine.  §29 

owner  of  a  ship  has  in  all  cases  an  insurable  interest  in  it,  even 
when  it  has  been  chartered  bv  one  who  covenants  to  pay  him 
its  value  in  case  of  loss ;  and  he  also  has  an  insurable  interest 
in  expected  freight  which  he  would  have  earned  but  for  the 
intervention  of  the  peril  insured  against.  And  the  charterer 
of  a  ship  also  has  an  insurable  interest  in  it.^ 

The  insurable  interest  of  the  owner  of  a  ship  hypothecated 
by  bottomry  is  only  the  excess  of  its  value  over  the  amount 
secured  by  bottomry.  The  lender  on  bottomry  may  insure  his 
interest  in  the  ship  to  the  amount  of  the  loan.'^ 

§  29.  The  Payee  or  Assignee  of  Life  Policy  need 
not  have  Insurable  Interest. — If  the  insured  has  an 
insurable  interest  to  support  the  policy  when  it  is  taken  out, 
he  may  make  it  payable  to  any  one,  or,  according  to  the 
weight  of  authority,  he  may  subsequently  assign  it  to  any 
one,  whether  such  transferee  has  an  insurable  interest  or  not, 
unless  the  transaction  from  its  inception  is  a  mere  cover  to 
avoid  the  statute  against  gambling  contracts.^ 

§  30.  When  must   Insurable   Interest  Exist. — In 

fire  and  marine  insurance  the  insurable  interest  must  exist  not 
only  at  the  commencement  of  the  risk,  but  also  at  the  time  of 
loss ;  but  in  life  insurance  it  may  cease  at  any  time  after  the 
making  of  the  contract.  A  creditor,  for  example,  who  has 
taken  a  policy  upon  the  life  of  his  debtor,  may,  on  the  death  of 
the  insured,  recover  the  full  amount  of  the  insurance,  notwith- 
standing the  debt  may  have  been  previously  paid.'*  Thus  it 
will  be  seen  that  the  contract  of  life  insurance  is  not  one  of 
strict  indemnity,  but  is  sufficiently  controlled  by  that  doctrine 
to  prevent  it  from  being  a  wager  in  its  inception. 

The  lea-ding  English  case  of  Dalby  v.  India  &  London 
Life  Assur.  Co.,  15  C.  B.  365,  which  overruled  Godsall  v. 
Boldero,  9  East,  Y2,  unquestionably  gives  the  sound  and  sen- 

»  Oliver    v.    Greene,    3    Mass.    133.  V  Dalby  v.  The  India  &  London  Life 

Barber  V.  Fleming,  L.  K.,  5  Q.  B.  59.  Assurance   Co.,    15   C.    B.    365.      St. 

'Robertson  v.    United  Ins.   Co.,   3  John  v.  Am.  Mut.  Life  Ins.  Co.,  13 

John.  Cas.  49!).  N.  Y.  31.    Scott  v.  Dickson,  108  Pa.  St. 

•  Olmsted  v.  Keyes,  85  N.  Y.  593.  6;  s.  c,  56  Am.  Rap.  192. 
Contra,  Warnock  v.  Davis,  104  U.  S. 

77a. 


§  32  Insurable  Interest,  39 

sible  rule,  though  Porter  endeavors  to  defend  the  doctrine  of 
the  hitter  case.^  The  rate  of  premiums  in  Hfe  insurance  is 
based  upon  the  supposition  that  the  event  upon  which  payment 
is  to  be  made  to  the  insured  will  certainly  occur  at  some  time 
or  other,  and  if  a  creditor  after  paying  premiums  for  a  long 
term  of  years  was  likely  to  lose  all  the  benefit  of  his  insurance, 
it  would  practically  prevent  the  use  of  this  important  kind  of 
security. 

§  31.  Temporary  Suspension  does  not  Avoid. — 

If  there  is  no  provision  in  the  contract  prohibiting  a  change  of 
interest,  a  temporary  suspension  of  the  interest  of  the  insured 
does  not  vitiate  a  policy  of  insurance,  but  only  suspends  its 
operation.^ 

§  32.  Insurable  Interest  as  Related  to  Measure 
of  Recovery :  Fire  and  Marine.^ — The  general  rule  is 
indemnity  to  the  insured  commensurate  with  his  insurable 
interest  at  the  time  of  loss,  as  shown  by  proof,  or  by  appraisal, 
or  as  previously  established  by  agreement  in  a  valued  policy. 

If  the  insured  is  the  owner  of  the  property  destroyed,  he  is 
entitled  to  recover  its  market  value  at  the  time  of  the  loss, 
without  making  any  deduction  for  the  amount  of  mortgage 
or  other  incumbrances  upon  it,  for  these  incumbrances  are  held 
to  be  of  no  concern  to  the  insurers.* 

A  mortgagee  recovers  the  amount  of  the  mortgage  debt^ 
existing  at  the  time  of  the  loss  without  regard  to  the  value  of  j 
the  mortgage  or  other  security  which  he  may  hold  on  account/ 
of  the  same  debt.' 

Inasmuch  as  the  right  of  subrogation  which  has  ah'ead}^  been 
described  does  not  arise  until  the  loss  occurs,  tlie  policy  of  in- 
surance will  not  be  affected  by  any  release  or  disposition  which 
the  mortgagee  may  make  of  his  other  securities  before  the  fire. 

"  Porter  on  Ins.,  p.  15.  fire  insurance    law  prepared  for  the 

'  Worthington  v.   Bearse,  12  Allen,  Yale  Law  School. 

382.     Lane  v.  Maine  Mut.  Fire  Ins.  *  Columbian  Ins.  Co.  v.   Lawrence, 

Co..  12  Me.  44.  10  Pet.  507. 

'  In  this  section  I  have  followed,  to  ''  Sussex  Co.  ^tut.  Ins.  Co.  v.  Wood- 
some  extent,  the  arrangement  given  by  ruff,  2  Dutch.  (N.  J.),  541.  Kernochan 
George  M.  Sharp,  Esq.,  of  the  Balti-  v.  N.  Y.  Bowery  Fire  Ins.  Co.,  5 
more  bar,  in  his  admirable  synopsis  of  Duer,  1. 


40  Insukanok:    Fikk,   Life,  Makijme.  §32 

But  after  the  loss  has  oucun-ed  any  release  of  such  securities 
will  discharge  the  insurers  ^/ro  tanto  in  case  they  are  entitled  to 
the  right  of  subrogation.^ 

Where  a  common  carrier,  warehouseman,  or  other  bailee, 
or  a  broker  or  factor,  insures  for  his  own  benefit,  he  recovers 
the  value  of  his  interest  in  the  subject  of  insurance,  whether  it 
be  his  commissions  or  profits  or  advances.  If  he  has  insured 
against  his  liability  as  bailee  for  the  loss  of  the  property,  he 
will  be  entitled  to  recover  its  cash  or  market  value  at  the  time 
of  loss ;  and  so,  also,  if  he  insures  for  the  benefit  of  the  owners 
of  the  goods  intrusted  to  him  as  well  as  for  his  own  benefit,  he 
will  be  entitled  to  recover  the  full  value  of  the  property  in- 
sured, holding  any  balance  above  his  own  interest  as  trustee 
for  the  owners.^  A  lessee  is  entitled  to  recover  for  the  value  of 
his  term.^  A  lessor  under  a  rent  policy  is  entitled  to  recover 
the  value  of  his  rent,  which  is  generally  agreed  upon  in  ad- 
vance by  a  valued  policy,  and  such  value  in  the  absence  of 
fraud  is  conclusive.^  A  vendee  under  an  executory  contract  of 
purchase  is  entitled  to  recover  the  full  value  of  the  property 
insured  by  him,  for  the  purchase  price  of  which  he  is  obli- 
gated.^ A  vendor  under  such  a  contract,  having  an  insurable 
interest  in  the  property  of  Avhich  he  still  holds  the  title, 
has  a  right  to  recover  its  full  value  unless  the  policy  limits 
his  interest.  The  court  cannot  assume  that  the  executory  con- 
tract will  be  completed,  and  the  rights  of  the  insured  become 
fixed,  at  the  time  of  the  fire.'  But  in  England  it  is  held  that 
after  the  vendor  has  received  the  amount  of  his  purchase  price 
the  insurers  can  recover  back  the  insurance  moneys  under  the 
doctrine  of  subrogation.  This  decision  carries  the  doctrine  of 
subrogation  to  an  extreme  limit,  and  it  would  appear  that  the 
views  of  Justice  Chitty  in  the  lower  court '^  are  more  convincing 
than  the  opinion  of  the  appellate  court.^     The  position  of  the 

'  Thomas  v.  Montauk  Fire  Ins.  Co.,  western  Ins.  Co.,  34  Me.  487.     Kaive 

43  Hun.  !il8.  v.  Commercial  Ins.  Co.,  8  Johns.  229. 

•  De  Forest  v.  Fulton  Fire  Ins.  Co.,        '  Bartlett  v.  Looney,  3  Vict.  L.  R 
1   Hall,  84.     Home   Ins.  Co.  v.  Balti-  Eq.  15. 

more  Warehouse  Co.,  93  U.  S.  527.  °  Insurance  Co.  v.  Updegraff,  21  Pa 

'  Niblo  V.  North  Amer.  Ins.  Co.,  1  St.  513. 

Sandf.  551.  '8  Q.  B.  D.  613. 

*  Carey   v.  London  Frov.  Fire  Ins.  "  Castellain  v.  Preston,  L.  R.,  11  (^ 
Co.,  33  Ilun.  315,     Cushmun  v.  North-  B.  D.  380  (1883). 


§  32  Insurable  Interest.  41 

latter  is  defended  in  learned  and  instructive  opinions,  delivered 
by  Justices  Brett,  Cotton,  and  Bowen,  of  which  the  first  two 
are  given  among  the  selected  cases  of  the  second  part  of  this 
book,  but  it  is  not  easy  to  find  in  thera  any  adequate  reason 
for  the  conclusion  at  whicli  the  court  arrived. 

Where  a  wrong-doer  causes  the  loss  to  the  insured,  and  the 
insurers  pay  it,  their  right  to  subrogation  is  plain.  Where  a 
mortgagee  holds  a  mortgage  as  collateral  security  for  the  pay- 
ment of  a  debt,  and  the  insurers  pay  the  mortgagee  under  the 
mortgagee's  policy,  many  courts,  though  not  those  of  Massa- 
chusetts, regard  the  insurance  and  the  mortgage  as  two  securi- 
ties for  the  payment  of  the  same  loss  in  such  a  sense  as  to 
demand  the  application  of  the  doctrine  of  subrogation  in  favor 
of  the  insurers  ;  though  it  ma}'^  not  be  clear,  upon  principle, 
why  the  insurers  should  be  subrogated  to  the  mortgage,  rather 
than  the  mortgagor  to  the  insurance.  But  it  cannot  be  main- 
tained that  the  purchase  price  arranged  for  in  an  executory 
contract  of  sale  is  in  any  respect  the  subject  of  the  insurance 
already  existing  upon  the  land.  It  is  rather  the  fruits  or 
profits  incidental  to  the  ownership  of  the  property  which  is 
still  vested  in  the  insured.  The  contract  of  sale  is  altogether 
independent  of  the  contract  of  insurance,  and,  unless  prohibited 
by  the  terms  of  the  policy,  has  no  relation  to  it ;  and  this  may 
be  well  illustrated  by  supposing  that  the  purchase  price  under 
the  executory  contract  is  to  be  paid  in  services  instead  of 
money.  In  that  event,  it  would  seem  almost  grotesque  to 
contend  that,  after  a  settlement  and  payment  under  the  policy, 
from  which  the  English  court  admitted  there  was  no  escape, 
the  insurers  may  claim  the  benefit  of  future  services  to  be  ren- 
dered to  the  insured  by  virtue  of  a  contract  made  subsequent 
to  the  policy.  No  such  agreement  of  recoupment  ought  to  be 
read  into  the  contract  of  insurance  by  the  court,  unless  equity 
or  public  policy  imperatively  demands  it.  If  the  contract  to  seU 
violates  one  of  the  conditions  of  the  policy,  the  insurers  will  be 
exonerated.  If  it  does  not,  then  they  ought  to  pay  according 
to  their  promise,  and  whether  the  insurance  money  ultimately 
remains  with  the  vendors  or  the  vendees  depends  upon  con- 
tract relations  with  which  the  insurers  are  not  in  privity. 

A  re-insured  is  entitled  to  recover  the  amount  which  he  is 
obligated  to  pay  by  the  original  insurance,  and  this  he  may 


42  Insurance  :    Fire,  Life,  Marine.  §  33 

recover  b}'  reason  of  his  liabilit}^  before  he  has  actually  made 
payment  thereof  to  the  insured.'  Under  a  policy  for  loss  of  use 
and  occupation  of  a  mill  or  other  building  while  undergoing 
repairs  or  ^yllile  being  rebuilt  after  the  fire,  the  amount  of  re- 
covery is  usually  defined  by  the  policy  as  so  much  per  day ; 
and  provision  is  often  made  for  ascertaining  by  appraisal  the 
amount  of  probable  loss  of  time. 

§  33.  Contract  is  Personal. — A  contract  of  insurance 
on  property  is  personal ;  that  is,  it  does  not  pass  to  the  new 
owner  by  virtue  of  a  transfer  of  the  title  of  the  property.* 
Hence,  upon  closing  a  sale  or  conveyance,  it  is  of  consequence 
to  the  vendee  to  see  that  new  policies  are  taken  out,  or  tiiat  the 
proper  indorsements  consenting  to  the  transfer  are  made  by  the 
insurers  upon  the  old  policies. 

This  rule  is  reasonable ;  for,  as  was  explained  in  the  intro- 
ductory chapter,  the  moral  risk  assumed  by  the  insurers  depends 
upon  the  character  and  circumstances  of  the  insured.  They 
have  a  right  to  know  with  whom  they  are  contracting,  and  no 
new  party  can  be  thrust  upon  them  without  their  consent. 
However  important  the  policy  of  insurance  may  be  to  the 
owner,  for  the  time  being,  of  the  property,  it  in  no  respects 
runs  with  the  land  or  other  property. 

§  34.  Contract  is  an  Entirety. — If  the  risk  has  not 
attached  at  all,  the  premium  is  returnable,  unless  the  policy  is 
avoided  by  fraud  of  the  insured  from  the  inception  of  the  con- 
tract ;  but,  if  the  risk  has  once  attached,  the  premium  is  not  to 
be  apportioned,  unless  by  special  agreement.^ 

§  35.  Assignment  of  Policies. — Before  loss  a  fire 
policy  is  not  assignable  without  the  consent  of  the  insurer; 
but  in  case  of  a  marine  or  life  policy  the  rule  is  otherwise,* 

'  Hone  V.  Mutual  Safety  Ins.  Co.,  1  747.    Joshua  Handy  Works  v.  Ins.  Co., 

Sandf.  137.  86  Oal.  248;  s.  c,  21  Am.  St.  Rep.  33 

'Powles  V.  Innes,  11  M.  &  W.  10.  (1890).     Ins.  Co.  v.  Pyle,  44  Ohio  St. 

Lett  V.    Guard.    Fire    Ins.    Co.,    125  19  ;  s.  c,  58  Am.  Rep.  781.     Heiuely 

N.    Y.    82.      Raynor    v.    Preston.    18  v.  So.  Tar.  Ins.  Co.,  1  Mill,  153;  s.  c, 

Ch.  D.  1.  12  Am.  Dec.  623. 

•  Blaeser  v.    Milwaukee  Mut.    Ins.  *  Earl  v.  Shaw,  1  Johns.  Cas.  814; 

Co.,  87  Wis.  31  ;  s.  c,  19  Am.  Rep.  s.  c,  1  Am.  Dec.  117. 


§  36  Insurable  Interest.  4S 

Often,  however,  in  the  policy  of  life  insurance  an  assignment 
is  made  ineffectual  until  after  written  notice  thereof  is  given 
to  the  company.  The  assignability  of  the  marine  policy  was 
early  established  by  custom,  and  grew  out  of  the  demands  of 
mercantile  business,  which  overrotle  the  theory  that  the  con- 
tract is  strictly  personal.  The  value  of  a  life  policy,  too,  would 
often  be  seriously  diminished  unless  the  owner  of  it  were  able 
to  make  it  the  source  of  immediate  benefit.  Inasmuch  as  it 
is  payable  upon  an  event  which  sooner  or  later  is  certain  to 
occur,  it  very  much  resembles  an  ordinary  chose  in  action,  and 
in  most  cases  no  just  reason  could  be  given  why  it  should  not 
be  assignable,  provided  the  insured  is  also  the  beneficiary. 

Under  the  New  York  Act  of  1840,  chap.  80,  designed  to 
secure  to  the  wife  and  children  of  the  insured  the  benefits  of 
life  insurance  free  of  creditors'  claims,  it  was  held  that  neither 
the  insured  nor  his  wife  could  assign  or  disturb  the  irrevocable 
interest  thereby  created.^ 

But  by  the  Act  of  1873,  chap.  821,  provision  is  made  for 
surrendering  the  policy  in  favor  of  a  married  woman  or  of  her 
and  her  children ;  also,  if  she  has  no  children  or  issue  thereof, 
for  disposing  of  such  policy  by  will  or  deed.^ 

And  by  the  Act  of  1879,  chap.  248,  the  wife  or  her  legal 
representatives  may,  with  her  husband's  written  consent,  assign 
any  policy  issued  within  the  State  upon  his  life  for  her  benefit 
and  use,  to  any  person,  or  may  surrender  it  to  the  insurer. 
The  policy  is  assignable  whether  the  wife  have  children  or  not, 
and  the  husband's  assent  is  sufficiently  shown  by  his  joining 
with  the  wife  in  the  assignment.^  Similar  statutes  have  been 
passed  in  other  States  (see  appendix). 

§  36.  Vested  Interests  :  Life  Insurance. — Where 
the  insured  designates  another  person  as  beneficiary,  the  right 
of  the  latter,  as  a  rule,  at  once  becomes  vested  so  that  it  cannot 
be  disturbed  by  assignment  or  will  or  in  any  way  without  his 
consent,  unless  the  right  to  make  a  new  appointment  is  re- 
served by  the  terms  of  the  policy  itself,  or  by  the  regulations 

•  U.  S.  Trust  Co.  V.  Mutual  Benefit  "Frank  v.  Mut.   Life  Ins.    Co.,  103 

Life  Ins.  Co.,   115  N.  Y.  152.     Eadie  N.  Y.  266. 

V.  summon,    26  N.    Y.    9.     Brick  v.  '  Anderson  v.  Goldsmidt  103  N.  Y 

Campbell.  123  N.  Y.  337.  617. 


44  Insurance  ;    Fikk,  Like,   Makine.  §  36 

of  the  company  subject  to  which  tlie  policy  is  issued,  or  by 
provision  of  law.' 

A  different  rule  is  adopted  in  Wisconsin,  where  it  has  lately 
been  held  that  one  who  has  procured  a  policy  upon  his  own 
life  for  the  benefit  of  another,  and  has  paid  the  premiums 
thereon,  may  dispose  of  the  insurance  money  to  the  exclusion 
of  the  beneficiary  named  in  the  policy,  during  the  lifetime  of 
such  beneficiary.^ 

If  a  husband  insures  his  life  for  his  wife,  and  pays  all  the 
premiums  with  money  embezzled  from  his  firm,  the  proceeds 
of  the  policy  will  belong  to  it ;  but  if  the  first  premium  is 
honestly  paid  by  him,  and  subsequent  premiums  with  money 
stolen  from  his  firm,  the  proceeds  of  the  policy  will  belong  to 
the  wife,  charged  with  a  lien  to  the  firm  for  the  amount  of  its 
money  used  for  premiums.^ 

If  the  beneficiary  named  in  a  policy  of  life  insurance  dies 
before  the  insured,  the  latter  having  taken  out  the  insurance 
and  paid  the  premiums,  a  new  appointment  may  be  made  by 
the  insured,  provided  the  first  appointment  was  purely  gratui- 
tous, especially  if  the  insured  has  kept  possession  of  the  policy.* 

This  rule  proceeds  upon  the  principle  that  the  intent  of  the 
insured  to  benefit  the  person  of  his  selection  having  been 
defeated  by  death,  he  ought  to  have  the  opportunity  of  decid- 

'/n  re  King.  14  Ch.  D.  179.  Wash-  dissenting  justice  wisely  remarks:  "The 
ington  Cent.  Bank  v.  Hume,  128  U.  S.  common  law,  as  well  as  truth,  is  al- 
195.  Gamer  v.  Germania  Life  Ins.  ways  in  harmony  with  itself.  Assumed 
Co.,  110  N.  Y.  266.  Fowler  V.  But-  evidences  of  it  in  the  shape  of  judicial 
terly,  78  N.  Y.  68.  Stilwell  v.  Mutual  decisions  may  be  in  conflict,  and  some- 
Life  Ins.  Co..  72  N.  Y.  385.  Lemon  times  are.  It  is  more  important  to 
v.  Phenix  Life  Ins.  Co.,  38  Conn.  294.  preserve  the  law  in  its  integrity  than 
Unity  Mut.,  etc.,  Assoc,  v.  Dugan,  118  an  erroneous  interpretation  of  it.  The 
Mass.  219.  Norris  v.  Mass.  Mut.  Life  repetition  of  an  exposed  error  is  more 
Ins.  Co.,  131  Mass.  294.  Ricker  v.  destructive  than  the  original.  No  de- 
Charter  Oak  Life  Ins.  Co..  27  Minn,  cision  should  take  rank  as  an  evi- 
193  ;  s.  c,  38  Am.  Rep.  289.  Glanz  dence  of  law  which  is  not  in  harmony 
T.  Gloeckler,  104  111.  57;i  ;  s.  c,  44Am.  with  the  logic  of  the  law,  especially 
Rep.  94.  Re  Richardson,  47  Law  when  sanctioned  by  the  great  weight 
Times,  N.    S.,   514.     Butler  v.  State  of  authority." 

Mut.  Life  Assur.  Co.,    55  Hun.    296.        »  Holmes  v.  Davenport.  27  Abb.  N. 

Phipard  v.  Phipard,  55  Hun.  4H3.  C.  841  ;  rev's'd,  19  N.  Y.  Suppl.  151. 

»  Estate  of  Breiton,  78  Wis  33(1890).        *  Bickerton  v.  Jnques,    12   Abb.   N. 

But  this  case  is  in  conflict  with  many  C.    25.       Shields   v.    Sharp,    35    Mo 

adjudications  by  other  courts,  and  the  Appeals,  178. 


§  37  Insurable  Interest.  45 

ing  whether  the  policy  shall  inure  to  the  benefit  of  the  repre- 
sentatives of  the  deceased,  or  shall  go  to  some  other  benefici- 
ary. The  decisions  are  somewhat  inharmonious,  but  any  rule 
depriving  the  insured  of  control,  in  such  a  case,  over  a  policy 
taken  out  and  kept  alive  by  him,  would  not  only  be  inequita- 
ble but  also  in  many  cases  ineffective,  for  when  the  next  pre- 
mium became  due  the  insured  might  allow  the  policy  to  lapse. 
In  case,  however,  a  new  appointment  is  not  made  by  the  in- 
sured before  his  death,  the  representatives  of  the  deceased 
appointee,  and  not  the  representatives  of  the  insured,  will 
receive  the  proceeds  of  the  insurance.* 

In  case  the  insured,  having  an  insurable  interest  in  the  life 
of  another,  takes  out  a  policy  upon  that  life,  and  pays  the  pre- 
miums for  the  benefit  of  himself,  the  policy  belongs  to  him, 
and  the  life  insured  has  no  interest  in  it  or  control  over  it. 

The  legislatures  of  some  of  the  States  have  provided  that  a 
change  of  beneficiary  may  be  made  in  certain .  cases  by  the 
insured  Avithout  the  consent  of  the  payee  first  named,  provided 
of  course  the  first  appointment  was  not  founded  upon  any  val- 
uable consideration  moving  from  the  payee  (see  appendix). 

§37.  Relations  between  Insurer  and  Insured: 

Liife. — The  policy  holder  is  a  creditor,  and  not  a  cestui  que 
trust  of  the  company,  and  hence  he  cannot  call  upon  the  com- 
pany, in  the  absence  of  fraud,  to  disclose  to  him  their  affairs  in 
general,  or  to  make  an  ;iccount  to  him  for  his  share  of  divi- 
dends or  profits  ;^  and  he  is  not  a  partner  in  the  company.^ 

As  soon  as  the  risk  attaches,  the  insured,  under  the  usual 
form  of  policy,  becomes  debtor  to  the  insurer  for  the  first 
premium,  if  it  has  not  been  paid.  But  as  to  the  future  pre- 
miums payable  in  advance,  the  relation  of  debtor  does  not 
exist,  for  the  contract  does  not  contain  a  promise  on  the  part 
of  the  insured  to  pay  the  premium,  but  the  payment  is  simply 
made  the  condition  of  the  continuance  of  the  contract.^ 


*  Walsh  V.  Mutual  Life  Ins.  Co.,  61  '  People  v.  Security  Life  Ins.,  &c., 

Hun.  91  (1891).     Continental  Life  Ins.  Co..  78  N.  Y.  114. 

Co.  V.  Palmer,  42  Conn.  60.  *  Goodwin  v.  Mass.  IMut.  Lifo  Ins. 

«  Uhlraan  v.  N.  Y.  Life  Ins.  Co.,  109  Co.,   73  N.  Y.  48(1.     Worthiiigton  v. 

N.Y.  421.    Matthew  V.  Northern  Assur.  Charter  Oak  Life  Ins  Co.,  41  Conn. 

Co.,  9  Law  Rep.  Ch.  Div.  80.  372  ;  s.  c,  19  Am.  Rep.  495. 


46  Insurance:    Fikk,  Like,  Marine.  §38 

§  38.  The  Contract  is  a  Property  Right :  Life.— 

Being  a  chose  in  action,  it  is  not  subject  to  attachment  or  exe- 
cution, except  as  in  New  York  by  statute,^  but  may  be  reached 
by  proper  proceedings  in  equity,  unless  it  is  by  statute  secured 
to  the  beneticiary  free  from  the  claims  of  creditors.^ 

Most  of  the  States  have  passed  statutes  upon  this  subject, 
sometimes  in  protection  of  all  classes  of  beneficiaries,  and  some- 
times for  the  benefit  of  the  wife  and  children  (see  appendix). 

»  Code  Civ.  Pro.,  sec.  648.  "  Bassett  v.  Parsons,  140  Mass.  16&. 


CHAPTEE  III. 

GENERAL    PRINCIPLES — CONTINUED. 

Oonsummatio7i  and  Construction  of  the  Contract. 

The  course  of  business  in  closing  insurance  contracts  is 
oftentimes  so  far  sui  generis^  that  it  will  be  advisable  to  con- 
sider to  what  extent  the  ordinary  rules  of  law  are  applicable 
to  such  a  case.  Many  important  classes  of  contracts  have  no 
validity  at  all  unless  evidenced  by  writing ;  and  whenever 
parties  see  fit  to  reduce  their  engagements  to  the  form  of  a 
written  instrument,  whether  required  by  law  to  do  so  or  not, 
it  is  presumed  that  the  contents  of  the  document  will  correctly 
and  conclusively  record  the  final  results  of  their  negotiations, 
and  that  its  execution  and  delivery  will  precisely  define  the 
time  when  the  agreement  goes  into  operation.  But,  in  the  act- 
ual conduct  of  their  affairs,  men  do  not  always  take  the  trouble 
to  conform  to  any  such  preconceived  notions,  if  their  conven- 
ience or  the  exigencies  of  their  business  suggest  a  different 
course.  Often  a  man  wants  to  insure  his  house,  or  goods, 
or  ship  without  delay.  In  most  of  the  States  of  the  Union 
there  is  no  law  preventing  a  valid  oral  contract  of  insurance, 
and  so  it  frequently  happens  that  fire  and  marine  insurances 
are  closed  before  the  insured  has  seen  his  policy,  or  has  been 
made  acquainted  with  its  conditions.  In  fact,  the  policy  may 
never  be  delivered  to  him  at  all,  or  not  until  after  the  loss 
has  occurred  for  which  it  was  intended  to  grant  indemnity ;  * 
and,  when  the  policy  is  received  by  him,  he  may  find  that  its 
terms  do  not  correspond  with  the  oral  agreement  of  insurance 
already  entered  upon. 

§  39.  Requisites  of  a  Complete  Contract. — The 

requisites  which  must  be  specified  to  make  a  valid  policy  are 

'  Thompson  v.  Adams,  L.R.,  33  Q.B.D.  361  (1889). 


48  Insurance  :   Fire,  Life,  Marine.  §  40 

the  names  or  description  of  the  parties,  the  rate  of  premium, 
the  property  or  hfe  insured,  the  risks  insured  against,  and  the 
term  or  duration  of  the  insurance;  ^  and  to  constitute  a  contract 
|bf  insurance  there  must  be,  as  in  other  cases,  a  meeting  of  the 
minds  of  the  parties — that  is,  a  mutual  assent  to  all  the  terms  of 
the  agreement.^  Thus,  if  both  parties  intend  that  the  insurance 
shall  cover  a  certain  ship  or  a  certain  house,  the  contract  will 
not  necessaril}'^  be  invalidated  because  by  mutual  mistake  they 
misname  it  in  the  policy  ;  but  if  one  party  has  in  mind  one  ship, 
and  the  other  party  has  in  mind  another  ship,  although  the 
two  ships  may  have  the  same  name,  there  is,  speaking  gener- 
ally, no  contract.^ 

§  40.  The  Particulars  are  sometimes  Under- 
stood.— It  is  not  necessary,  however,  that  all  the  partic- 
ulars of  a  contract  should  be  made  the  subject  of  express 
negotiation  between  the  parties  ;  for  it  may  well  be  under- 
stood, in  the  absence  of  any  express  declaration  to  the  con- 
trary, that  the  usual  form  of  policy  is  acceptable  to  both 
parties.* 

Even  the  essentials  of  the  contract  may  often  be  agreed 
upon,  inferentially,  by  reference  to  a  prior  course  of  dealing 
between  the  parties.^ 

Thus  if  A,  whose  policy  is  about  to  expire,  goes  to  the 
oflBce  of  the  insurer,  and  requests  a  renewal  for  a  year,  and 
receives  the  answer  from  the  proper  representative  of  the 
company  that  he  may  consider  his  policy  as  renewed,  and 
that  the  renewal  receipt  will  be  sent  in  the  course  of  a  few 
days,  and  that  he  may  then  pay  the  premium,  the  contract  of 
renewal  is  complete  and  binding,  whether  the  new  policy  or 
renewal  receipt  may  chance  to  be  delivered  before  the  fire  or 
not/ 

'  Boice  V.  Thames  &  M.  Marine  Ins.  *  DeGrove  v.  Met.  Ins.  Co.,  61  N.  T. 

Co..  38  Hun.  246,  602;  s.c,  19  Am.  Rep.  305. 

'  Insurance     Co.     v.      Lyman,     23  "  Winne  v.  Niagara  Fire  Ins.  Co.,  91 

Wall.     85.      Goddard     t.     Insurance  N.  Y.  190.    Boice  v.  Thames  &  M.  Ma- 

Co.,  108  Mass.  56;  s.c,  11  Am.  Rep.  rine Ins.  Co.,  38  Hun.  246.    Ruggles  v. 

807.  Am.  Central  Ins.  Co.,  114  N.  Y.  418. 

•  Hughes   V.    Mercantile   Mut.   Ins.  "  Angell  v.  Hartford  Fire  Ins.  Co., 

Co.,  55  N.  Y.  265.     Sanders  v.  Cooper,  59  N.  Y.  171  ;  s.  c,  17  Am.  Rep.  322. 

115  N.  Y.  279.  Eames  v.  Home  Ins.  Co.,  94  U.  S.  621. 


§42  Consummation  of  Contract.  49 

§  41.  Contract  may  be  Closed  by  Parol. — An  oral 

contract  of  insurance  or  an  oral  contract  to  issue  a  policy  is 
valid,  unless  prohibited  by  statute  as  by  the  Civil  Code  of 
Georgia  or  sometimes  by  Stamp  Laws,  and  will  be  binding 
from  the  time  the  oral  contract  is  complete,  although  the  loss 
occur  before  a  policy  is  issued.^ 

The  statute  of  frauds  is  not  applicable;^  and,  although  the 
charter  of  a  company  provides  that  the  contract  of  insurance 
must  be  in  writing,  this  requirement  is  by  most  courts  held  to 
be  a  direction  to  the  company,  and  not  binding  upon  an  inno- 
cent party  who  has  parted  with  value  to  the  company  in  good 
faith  under  an  oral  contract.^ 

But  the  representative  of  the  company  to  bind  it,  by  parol  or 
otherwise,  must  be  one  having  authority,  and  stipulations  in  the 
application  or  policy  in  restriction  of  his  authority  will,  if  true 
in  fact,  be  binding  upon  the  insured,  at  any  rate  after  notice  of 
them  is  received.* 

§  43.  Contract  to  issne  Policy  is  Governed  by 
Terms  of  Usual  Policy. — Whether  the  contract  of  insur- 
ance is  closed  by  parol  or  by  a  preliminary  binding  receipt, 
the  legal  presumption  is  that  the  usual  policy  is  to  follow. 
Hence  the  stipulations  and  conditions  of  the  policy  are  binding 
upon  the  insured  from  the  moment  of  closing  the  contract, 
although  the  policy  may  not  be  received  until  after  the  loss, 
and  although  the  insured,  through  ignorance  of  its  conditions, 
may  have  forfeited  his  rights  thereunder.^ 

So,  also,  after  delivery  of  the  policy  the  insured  is  conclu- 
sively presumed  to  be  acquainted  with  its  terms  and  is  bound  by 

'  Insurance  Co.    v.    Colt,    20  Wall,  State,  172.    Palmer  v.   Hartford  Fire 

560.    Fish  V.  Cottenet,  44  N.  Y.  .538  ;  Ins.  Co.,  54  Conn.  488. 
8.  c,  4  Am.  Rep.  715.     Ellis  v.  Albany       *  Walsh  v.   Hartford  Fire  Ins.  Co., 

City  Fire  Ins.  Co.,  50  N.  Y.  402.     Van  73  N.  Y.  5.    Ins.  Co.  v.  Norton,  96  U. 

liOanv.  Farmers' Mut.  Fire  Ins    Co.,  S.  240.    Kister  v.  Lebanon  Mut.  Ins. 

90  N.  Y.  280.  Co..  128  Pa.  State,  553  ;  s.  c. ,  15  Am. 

«  Phoenix    Ins.    Co.    v.    Spiers,    87  St.  Rep.  696.    Ins.  Co.  v.  Wilkinson, 

Ky     286.      Wiebeler    v.    Milwaukee,  13  Wall.  222. 

&c.,    Ins.    Co.,    30    Minn.    464.     Ala.        '  De    Grove    v.    Metrop.    Ins.    Co., 

Gold  Life  Ins.  Co.  v.  Mayes,  61  Ala.  supra.     Lipman  v.  Niagara  Fire  Ins. 

163.  Co.,  121  N.  Y.  454.     Sanborn  v.  Fire- 

•  Parish  v.  Wheeter,  22  N.  Y.  494.  man's  Ins.  Co.,  16  Gray,  448.     Relief 

Lloyd  V.   West  Branch  Bank,  15  Pa.  Fire  Ins.  Co.  v.  Shaw,  94  U.  S.  574. 

4 


50  Insurance  :   Fire,  Life,  Marine.  §  43 

them,  whether  he  has  read  the  policy  or  not.*  The  deUvery  of 
a  pohcy  is  not  in  itself  so  significant  and  controlling  as  the 
delivery  of  a  deed  or  ordinary  written  instrument.' 

§  43.  Certain  Rules  of  Construction. — The  general 
rules  of  law  must  be  invoked  to  arrive  at  a  proper  construction 
of  the  insurance  contract,  but  the  more  important  of  these  rules 
in  their  relation  to  insurance  law  demand  special  notice. 

(1)  The  written  contract,  including  almost  always  the  appli- 
cation or  survey,  if  there  is  one,  is  the  onlj''  evidence  of  what 
the  contract  is  as  to  all  matters  which  it  purports  to  cover.* 
Thus,  for  example,  a  pamphlet  or  prospectus  issued  by  the  in- 
surance company  is  not  admissible  in  evidence  to  disturb  the 
terms  of  the  policy,  although  the  insured  may  have  incurred  a 
forfeiture  in  consequence  of  reliance  upon  its  representa 
tions;^  for  all  prior  and  contemporaneous  negotiations,  prom- 
ises and  statements,  whether  written  or  oral,  become  merged 
in  the  written  contract.  That  is  still  ostensibly  the  rule,  but 
under  the  doctrine  of  waiver  and  estoppel,  to  be  hereafter 
discussed,  as  applied  to  insurance  contracts,  it  may  be  ques- 
tioned whether  it  should  not  be  called  the  exception  rather 
than  the  rule. 

It  is  to  be  observed  that  the  language  of  the  policy  is  not 
in  all  cases  conclusively  binding  and  effective  ;  for  grounds  may 
sometimes  exist  for  relief  in  equity.  Thus,  in  a  clear  case  of 
mutual  mistake — that  is,  where  it  plainly  appears  by  evidence 
outside  the  contract  that  the  real  agreement  of  the  parties  is 
not  correctly  evidenced  by  the  policy — or  where  there  is  a  mis- 
take on  one  side  and  fraud  inducing  it  on  the  other,  the  w^ritten 
contract  may  in  a  proper  case  be  reformed  by  equity  to  corre- 
spond with  the  real  agreement." 

Similarly,  either  party  may  obtain  in  equity  a  rescission  of 

'  Allen  V.  German  Am.  Ins.  Co.,  123  *  Maher    v.  Hibernia   Ins.   Co.,   67 

N.  Y.  6.     Monitor  Mut.  Fire  Ins.  Co.  N.    Y.   283.      Harris  v.    Columbiana 

V.  Buflfum,  115  Mass.  343.  County  Mutual  Ins.  Co.,  18  Ohio  116; 

'  Xenos  V   Wickham,  L.  R.,  2  H.  L.  s.  c,  51  Am.  Dec.  448.     But  judgment 

396.  on  insurance  contract  is  a  bar  to  an  ac- 

'  Ins.  Co.  V.  Mowry,  96  U.  S.   544.  tion  to  reform  it.     Steinbach  v.  Relief 

Ins.  Co.  V.  Lyman,  15  Wall.  664.  Fire  Ins.  Co.,  77  N.  Y.  498;  8.  c,  89 

*  Fowler  v.  Metropolitan  Ins.  Co.,  Am.  Rep.  ^656. 
lie  N.  Y.  389. 


§  43  Construction  of  Contract.  51 

the  coRtract  for  fraud  or  mutual  mistake  with  a  njinstatement 
of  the  parties.^ 

But  it  is  important  to  notice  that  after  a  fire  or  marine  loss, 
or  after  a  loss  under  a  life  policy,  unless  the  life  policy  has  run 
for  a  large  part  of  its  anticipated  duration,  this  form  of  relief 
would  be  unsatisfactory. 

(2)  A  court  must  not  use  its  discretion  to  modify  the  con-   '' 
ditions  or  provisions  of  the  contract  entered  into  by  the  parties 
in  order  to  effectuate  what  it  might  consider  a  more  equitable 
arrangement  than  that  resulting  from  an  enforcement  of  the 
strict  terms  of  the  policy.'^ 

This  elementary  proposition  of  law  is  not  peculiar  to  insur- 
ance, but  in  the  construction  of  insurance  contracts  it  is  pecul- 
iarly apt  to  be  disregarded  by  some  tribunals. 

(3)  If  there  is  any  inconsistency  between  the  written  and  ^'^■ 
the  printed  words  of  the  policy,  the  former  prevail,  because  they 
are  framed  and  inserted  with  reference  to  the  particular  con- 
tract, and  the  parties  do  not  generally  take  the  trouble  to  revise 

or  alter  the  formal  printed  conditions.^ 

Thus,  for  example,  where  a  furniture  dealer  insured  his 
"stock  in  trade,"  the  written  description  was  held  to  cover 
paints,  oils,  and  varnishes  used  to  finish,  though  in  answer  to 
an  inquiry  it  was  stated  that  no  explosive  or  highly  inflamma- 
ble matter  was  kept  on  the  premises.* 

In  the  same  way,  insurance  "as  a  manufacturer  of  brass 
clock  works  "  permits  the  use  of  all  such  articles  as  are  ordi- 
narily employed  in  that  manufacture,  and  the  making  of  them 
for  that  purpose,  if  such  be  the  ordinary  course  of  the  business, 
although  the  use  of  such  articles  be  prohibited  as  extra- 
hazardous by  the  printed  terms  of  the  policy.^ 

In  an  English  case  where  the  Lloyd's  form  of  policy  was 
filled  up  as  a  time  policy  on  the  ship,  it  was  argued  from  the 
various  clauses  not  usually  struck  out,  and  in  this  case  left 
standing,  referring  to  a  voyage,  that  certain  conditions  only 

'  Union  Cent.  Life  Ins.  Co.  v.  Pott-  La.  66  ;s.c.,  23  Am.  Dec.  458.  Robert- 

ker,  33  Ohio  St.  459  ;   s.  c,  31  Am.  son  v.  French,  4  East  130. 

Rep.  555.  *  Haley  v.  Dorchester  Fire  Ins.  Co., 

"Allen   V.   German    Am.  Ins.   Co.,  12  Gray  (Mass.),  546. 

123  N.  Y.  6.  "  Bryant  v   Poughkeepsie  Mut.  log. 

»  Harper  v.  N.  Y.  City  Fire  Ins.  Co.,  Co.,  17  N.  Y.  200. 
82  N.  Y.  443.   Nicollet  v.  Ins.  Co.,  8 


52  Insurance  :    Fire,   I^ife,  Marine,  §  43 

applicable  to  a  voyage  policy  applied  to  the  ship  in  the  case  of 
the  policy,  though  in  terms  a  time  policy  ;  but  the  court  held 
otherwise,  and  said  :  "  It  has  been  suggested,  that,  by  reason  of 
the  policy  having  been  drawn  up  on  a  printed  form,  the 
printed  terms  of  which  are  applicable  in  a  voyage  policy  to 
goods  as  well  as  to  the  ship,  the  policy  is  something  less  or 
something  more  than  a  time  policy ;  but  the  practice  of  mercan- 
tile men  writing  into  their  printed  forms  the  terms  by  which 
they  desire  to  describe  and  limit  the  risk  intended  to  be 
insured  against,  without  striking  out  the  words  which  may  be 
applicable  to  a  larger  or  different  contract,  is  too  well  known 
and  has  been  too  constantly  recognized  in  courts  of  law  to  per- 
mit any  such  conclusion."  ^ 

Hence  it  is  that  in  the  familiar  instance  of  words  written  in 
the  margin  or  at  the  foot  of  policies,  and  especially  marine 
policies,  such  written  words  are  considered  as  applying  indefi- 
nitely to  the  whole  of  the  policy,  and  as  controlling  the  sense 
of  those  parts  of  the  printed  policy  to  which  they  apply ;  so 
that  by  the  word  ship,  or  freight,  or  goods  written  in  the 
margin,  the  general  terms  of  the  policy  applicable  to  other 
subjects  besides  the  particular  one  mentioned  in  the  margin  are 
considered  as  narrowed  in  point  of  construction  to  it.^ 

So  it  has  been  held  that  the  words  restricting  the  liability 
of  the  insurers  "  against  actual  total  loss  only,"  written  upon 
the  margin,  prevail  over  any  inconsistent  printed  provisions  in 
the  body  of  the  policy.^ 

On  the  same  principle,  it  is  held  that  the  special  printed 
clauses  or  riders  attached  to  the  policy  prevail  over  the  more 
general  terms  of  the  ordinary  printed  form.* 

(4)  If  the  language  of  the  policy  is  ambiguous  and  fairly 
open  to  doubt,  of  which  the  court  is  judge,  oral  evidence  is 
admissible  to  explain  the  real  meaning  of  the  parties.® 

(5)  Evidence  of  a  general  and  well-known  custom  of  trade 
may  be  received  in  evidence  as  within  the  probable  contempla- 


'  Dudgeon  v.  Pembrook,  2  App.  Oas.  *  Gunther  v.  L. ,  L.  &  Globe  Ins.  Co., 

•^84.  34  Fed.  Rep.  501. 

'  Chadsey  v.  Guion,  97  N.  Y.  3  !3.  '  Daniels  v.  Hudson  River  Fire  Ins. 

*  Burt  V.  Brewers  and  Maltsters  Ins.  Co.,    12    Cush.   416;    59    Am.    Dec 

Co.,  9  Hun.  383  ;  affirmed  in  78  N.  Y.  193. 
400. 


L) 


§  43  Construction  of  Contbaot.  53 

tion  of  the  parties,  provided  the  custom  is  not  inconsistent  with 
the  express  terras  of  the  policy,  and  the  language  of  the  policy 
is  not  clear.^  Trade  usage  plays  a  particularly  important  part 
in  the  law  of  marine  insurance. 

The  law  of  merchants,  consisting  of  certain  principles  which 
general  convenience  has  established  to  regulate  the  dealings  of 
merchants  with  each  other  in  all  countries,  may  be  considered 
as  a  branch  of  public  law.  The  courts  take  official  cognizance 
of  this  where  it  has  been  established  by  a  course  of  decisions. 
But  a  particular  or  local  custom  must  be  affirmatively  estab- 
lished by  evidence  and  shown  to  have  been  known  to  both 
parties  and  within  the  probable  contemplation  of  the  contract.'' 

(6)  The  contract  of  insurance  having  been  framed  by  the 
insurers  in  their  interest,  and  the  insured  being  compelled  to 
accept  the  form  offered  in  order  to  secure  insurance,  any  am-  ^^ 
biguity  as  to  the  intent  or  meaning  of  its  terms,  or  what  prop- 
erty was  intended  to  be  covered,  or  where  situated,  will  be 
construed  in  favor  of  the  insured,  and  with  the  purpose  of 
granting  him  an  indemnity  for  his  loss.^ 

(7)  Forfeitures  are  not  favored,  and    equivocal   words   or 
phrases,  or  provisions  repugnant  to  one  another,  will  be  so 
construed  as  to  give  effect  to  the  instrument  rather  than  to     --^ 
avoid  it.* 

The  adoption  of  a  standard  form  of  fire  policy  has  not 
changed  the  rules  of  construction  previously  prevailing  in  this 
regard. 

The  object  of  the  New  York  statute  is  declared  to  be  to 
provide  a  uniform  contract  or  policy  of  fire  insurance — not  to 
prescribe  terms  which  should  seem  to  the  legislature  reason- 
able. When  the  act  was  passed,  the  form  of  policy  had  not 
yet  been  adopted.  Its  preparation  was  left  to  insurance  men, 
to  wit,  the  New  York  Board  of  Fire  Underwriters,  and  by 

»  Glendale  Woolen  Co.  v.  Ins.  Co.,  v.   ^tna    Fire    Ins.    Co.,    61    N.    Y. 

21  Conn.  19  ;  s.  c,  54  Am.  Dec.  308.  571. 

Mooney  v.  Howard  Ins.  Co.,  138  Mass.  *  Phenix  Ins.  Co.  v.  Tomlinson,  125 

375  ;  52  Am.  Rep,  277.  Ind.  84  ;  s.  c,  21  Am.  St.  Rep.   203. 

5  Walls  V.  Bailey,  49  N.  Y.  464.  Baker  v.  Homestead  Fire  Ins.  Co.,  80 

'  Kratzenstein    v.    Western    Assur-  N.  Y.   21  ;    s.   c,  36  Am.   Rep.   570. 

ance  Co.,    116   N.    Y.   54.      Hoffman  Statutes    relieving  the  insured   from 

V.    ^tna  Fire    Ins.    Co.,    32  N.    Y.  forfeiture  in  certain  cases  will  be  found 

*05  ;   s.  c,  88  Am.   Dec.  839.     Foot  referred  to  and  classified  in  appendix. 


64  Insurance  ;    Fire,  Life,  Marine.  §  44 

section  3  of  the  act  it  is  provided  that  any  policy  made  in 
terms  inconsistent  with  the  provisions  of  the  act  shall  never- 
theless be  binding  upon  the  company.^ 

§  44.  What  Law  governs  the  Construction  of 
the  Contract. — Ordinarily  the  laws  and  usages  of  the  place 
where  the  contract  of  insurance  is  made  are  to  be  applied  in 
its  interpretation  and  construction.'^ 

This  rule  is  applied  because  in  insurance  there  may  be  sev- 
eral places  where  the  contract  is  operative — one  place  for  the 
payment  of  premium ;  another  for  the  payment  of  loss,  and  a 
third  for  the  location  of  the  subject  of  insurance.  But  if  the 
policy  provides  that  the  loss  and  the  premiums  are  to  be  pay- 
able at  the  home  office,  the  latter  place  would  seem  to  be  the 
place  of  performance,  and  its  law  to  prevail  in  the  construction 
of  the  policy. 

It  is  often  important  to  determine  by  what  law  the  validity 
and  effect  of  the  policy  are  to  be  governed,  because  the  stat- 
utory provisions  relating  to  the  insurance  contract  vary  greatly 
in  the  different  States. 

If  the  policy  provides  that  it  will  not  be  binding  until 
countersigned  at  a  certain  agency,  the  agency  is  the  place  of 
contract.  So  if  the  policy  is  sent  to  the  agent  for  delivery  on 
receipt  of  the  premium ;  ^  but  if  the  application  is  accepted  at 
the  home  office,  and  the  policy  mailed  from  there  to  the  appli- 
cant in  another  State,  the  home  office  will  be  the  place  of 
contract.*  As  a  general  thing  the  contract  is  considered  made 
where  the  last  act  necessary  to  complete  it  is  done.^ 

The  standard  of  seaworthiness  of  a  ship  is  to  be  determined 
by  the  custom  of  the  port  and  country  to  which  the  vessel 
belongs,  rather  than  that  of  the  place  where  the  insurance  is 
made." 

§  45.  Who  Construes  the  Contract,  Court  or 
Jury. — This  is  an  intensely  practical  question,  because  a  court 

'  L.  1886,  c.  488.  59  Am.  Dec.  192.     Cook  v.  Johnson, 

*  Equitable  Life  Assur.    Society   v.  a  Dutch    (N.    J.)   645;   72  Am.   Dec. 
elements,  140  U.  S.  226.  3:9. 

*  Thwing  V.  Great  Western  Ins  Co  ,  ''  Northampton  Live   Stock   Co.   v 
111  Mass.  93.  Tuttle.  40  N.  J.  L.  476. 

*  Daniels  v.  Ins.  Co.,  12  Cush.  416;  '  Titania,  19  Fed.  Rep.  101. 


§  45  Construction  of  (\)ntract.  55 

tries  to  enforce  the  contract  according  to  its  legal  meaning 
and  effect,  whereas  a  jury  is  apt  to  consider  an  insurance  an 
absolute  contract  of  indemnity  regardless  of  conditions,  and 
will  almost  invariably  find  for  the  insured,  unless  his  claim  is 
characterized  by  some  element  of  dishonesty  or  bad  faith. 

The  general  rule  is  that  the  construction  of  the  policy  of 
insurance  is  a  question  of  law  for  the  court  to  determine,  and 
warr-anties,  as  we  shall  see  hereafter,  must  be  strictly  enforced 
regardless  of  their  materiality ;  but  when  the  language 
employed  to  describe  the  thing  warranted  is  not  free  from 
ambiguity,  or  when  it  is  equivocal  and  its  interpretation 
depends  upon  the  sense  in  which  the  words  are  used  in  view  of 
the  subject  to  which  they  relate,  the  relation  of  the  parties  and 
the  surrounding  circumstances  properly  applicable  to  it,  the 
intent  of  the  parties  becomes  a  matter  of  inquiry,  and  the 
interpretation  of  the  language  used  by  them  is  a  mixed  ques- 
tion of  law  and  fact.  Such  a  question  is  to  be  submitted  to 
the  jury  under  appropriate  instructions.^ 

If  the  testimony  is  undisputed,  whether  it  amounts  to  a 
breach  of  warranty  or  not  is  generally  for  the  court.^  And 
if  the  facts  are  such  that  to  the  average  mind  only  one 
inference  is  deducible  from  them,  the  court  must  make  a  decis- 
ion as  matter  of  law ;  but  otherwise  questions  of  mixed  law 
and  fact  properly  belong  to  the  jury.^  Thus  the  question, 
whether  the  risk  has  been  increased,  whether  a  man  is  in  good 
health,  whether  he  is  of  temperate  habits,  or  has  used  due 
diligence,  or  has  exhibited  good  faith,  whether  his  ship  was 
seaworthy,  whether  the  conduct  of  a  duly  authorized  agent 
amounts  to  a  waiver,  and  kindred  issues,  are  usually  for  the  jury, 
although  the  policy  contains  a  warranty  in  respect  to  them. 

The  Connecticut  court  says  :  "  Extreme  cases  either  way 
may  be  easily  determined.  Between  them  there  is  a  wide  belt 
of  debatable  ground,  and  cases  falling  within  it  are  governed 
so  much  by  the  peculiar  circumstances  of  each  case  that  it  is 
much  better  to  determine  the  matter  as  a  question  of  fact.  "  * 

*  Kenyon  v.  Knight  Templars,  122    729.     Appleby  v.  Astor  Fire  Ins.  Co., 
N.   Y.  247.     Northwestern  Life   Ins.     54  N.  T.  253. 

Co.  V.  Muskegon  Bank,  l\-'2  U.  S.  501.  '  Donahue  v.  Ins.  Co.,  56  Vt.  880. 

*  D wight  V.  Germania  Life  Ins.  Co.,        *  Lockwood  v.  Ins.   Co.,    46  Conn. 
H)8  N.   Y.  341  ;   s.  c,  57  Am.   Rep.     553. 


CHAPTEE  IV. 

OENEEAL    PRINCIPLES — CONTINUED. 

Representations  and  Concealments. 

The  contract  of  insurance  is  preeminently  one  requiring 
good  faith  between  the  parties  ;  and  fraudulent  dealing  at  any 
stage,  either  before  or  after  the  issuance  of  the  policj'^,  is  fatal 
to  the  rights  of  the  party  responsible  for  it.  The  principle 
caveat  emptor  does  not  apply.  The  party  wishing  to  effect  an 
insurance  is  in  duty  bound  to  make  a  frank  and  honest  dis- 
closure of  those  circumstances  which  are  likely  to  affect  the 
insurer's  estimate  of  the  risk,  and  particularly  is  this  true  in 
the  case  of  marine  insurance,  where  the  means  of  information 
are  apt  to  be  peculiarly  and  often  exclusively  within  the  reach 
of  the  applicant. 

Equity  requires  that  the  two  parties  should  contract  pari 
passu,  which  can  only  be  the  case  when  the  knowledge  of  the 
assured  is  communicated.  Hence,  the  question  whether  any 
fact  should  be  communicated  depends  upon  whether  it  is  mate- 
rial, not  upon  the  opinion  of  the  proposer  whether  it  is  so.  If 
he  is  himself  ignorant  of  the  material  fact,  he  can  of  course  be 
under  no  obligation  to  disclose  it.  Otherwise  he  would  no 
longer  contr sect  pari  passu  with  the  insurers. 

§  46.  Concealment :  Marine  Insurance. — In  marine 
insurance  a  concealment  of  a  material  fact  by  a  party  or  his 
authorized  agent,  whether  innocent  or  fraudulent,  avoids  the 
contract.^-  ^*-^^  "i  >  ^ 

Thus  a  policy  was  effected  on  goods  on  board  ship  or  ships 
from  the  Canary  Islands  to  London  by  an  agent  of  the  assured, 

^  'a    '  Howe  Machine  Co.  v   Farrington,     Ins.    Co.    v.    Lloyd,    10  Exch.    523. 
"^      83  N    Y.    126.     Proudfoot  v.  Monte-     Blackburn  v.  Haslam,  L.  R.,  21  Q.  B 
fiore,  L.  R.,  2  Q.  B.  511.    North  British    D.  144  (1838). 


§  47  Representations  and  Concealments. 

who  at  the  time  knew  that  a  portion  of  the  goods  to  be  insured 
was  on  board  the  President,  and  also  that  the  President  had 
been  reported  at  Lloyd's  as  at  sea,  deep  and  leaky.  He  did  not 
inform  the  underwriter  that  the  President  was  one  of  the  ships 
connected  with  the  proposed  risks,  so  that  the  underwriter  had 
no  means  of  applying  the  intelligence  existing  at  Lloyd's.  The 
court  held  that  the  suppression  of  this  fact  by  the  assured 
vitiated  the  policy,  notwithstanding  it  turned  out  that  the 
intelligence  at  Lloyd's  was  unfounded,  the  President  not  having 
been  deep  or  leaky  on  any  part  of  the  voyage  insured,  and  that 
she  was  lost  not  by  perils  of  the  seas  at  all,  but  by  capture 
which  occurred  three  weeks  after  the  period  referred  to  in 
Lloyd's  "  Intelligence."  ' 

To  render  the  agent's  concealment  fatal  he  must  be  one 
who  is  so  connected  with  the  business  at  the  time  of  closing 
the  contract  that  his  concealment  can  fairly  be  said  to  be  the 
act  of  the  principal  within  the  scope  of  the  employment  and 
before  the  agency  is  terminated^..  (X^W  •S  "^  ^ 

§  47.  Concealment :  Fire  and  Life. — In  regard  to 
contracts  of  life  and  iire  insurance  it  is  generally  laid  down  as 
the  law  in  this  country  that  the  concealment  of  a  material  fact, 
when  not  made  the  subject  of  express  inquiry  by  the  insurers, 
must  be  intentional  to  avoid  the  policy ;  and  this  is  partly  on 
the  grountl  that  insurers  have  for  a  long  time  been  in  the  habit 
of  propounding  questions  upon  all  points  except  those  in  respect 
to  which  they  are  content  to  reh''  upon  their  own  independent 
means  of  information,  and  partly  because  life  and  fire  policies 
generally  make  a  multitude  of  particulars  material  to  the  risk.^ 

But  in  England  the  rule  is  stated  as  applicable  to  all  kinds 
of  insurance,  that  the  concealment  of  a  material  fact,  whether 
intentional  or  unintentional,  will  avoid  the  contract.* 

Insurers  are  not  generally  inclined  to  press  this  matter  of 

'  Lynch  v.  Hamilton,  3  Taunt.  37.  Harmer,  3  Ohio  St.  452  ;  s.  c,  .59  Am. 

'h-'^  '  *  Blackburn  v.  Vigors,  L.  H.,  12  App.  Dec.  684.     Clark  v.  Union  Mut.  Ins. 

Cm-    531.      Ruggles   v.   General  Ins?  Co.,  40  N.  H.  333  ;  s.  c ,  77  Am.  Dec. 

Co.,  12  Wheat.  408.  721. 

•  Washington  Mills  Mfg  Co.  v.Wey-        *  London  Ass  Oo.  v.  Mansel,  L.  R., 

mouth  Ins.  Co.,  135  Mass.  503.     Mai-  11  Ch.  D.  363.     Moens  v.  Heyworth, 

Jory  V.   Travellers  Ins.  Co.,  47  N.  Y.  10  M.  &  W.  155.     Carter  v.  Boehm, 

52.    Hartford  Protection  Ins.  Co.  v.  1  W.  Bl.  593 ;  s.  c. ,  Smith's  Lead.  Cas. 


58  Insurance  :   Fike,  Life,  Marine.  §  47 

innocent  concealment  too  far,  nor  would  it  be  good  policy  for 
them  to  do  so ;  for  the  rule  works  both  ways,  and  in  reality  it 
might  appear  that  with  his  profound  expert  knowledge  of  the 
situation  the  insurer  is  acquainted  with  many  important  facts 
of  a  general  character  bearing  upon  the  risk  which  he  does  not 
trouble  himself  to  disclose  to  the  insured. 

Neither  party  is  bound  to  volunteer  information  of  matters 
which  the  other  knows,  or  which  in  the  exercise  of  ordinary 
care  the  other  ought  to  know,  and  of  which  the  former  has  no 
.reason  to  suppose  him  ignorant,  or  those  of  which  the  other 
waives  communication.' 

Each  party  is  bound  to  know  matters  of  general  intelligence 
or  of  public  notoriety,  including  general  usages  of  trade  which 
are  open  to  his  inquiry  equally  with  that  of  the  other.^  But  the 
insurer  is  not  presumed  to  know  the  contents  of  Lloyd's  Lists.' 

Matters  of  mere  opinion  or  belief  need  not  be  stated.* 

Where  the  insurer  makes  special  inquiries,  as  by  requiring 
the  execution  of  an  application,  it  may  generally  be  assumed 
that  the  information  asked  for  is  all  that  is  required.^  Other 
matters  relating  to  the  risk,  and  particulars  about  the  title,  not 
asked  for,  need  not  be  volunteered.^  This,  in  practice,  con- 
stitutes an  important  modification  of  the  general  rule  requiring 
a  full  disclosure  of  all  material  facts,  inasmuch  as  a  written 
application  is  almost  invariably  made  the  basis  of  a  life  policy, 
and  the  fire  policy  by  its  own  terms  provides  for  certain  dis- 
closures ;  but  even  then  the  applicant  must  evince  good  faith, 
and  would  be  guilty  of  a  wrongful  concealment  if  he  withheld 
intelligence  which  would  clearly  affect  the  judgment  of  the 
insurer.  As,  for  example,  that  serious  attempts  had  lately 
been  made  to  set  fire  to  his  house,  or  that  his  ship  was  already 
in  distress.''' 


»  Dilleber  v.  Home  Life  Ins.  Co.,  69  Ins.  Co.,  2  G.  &  J.  136;  s.  c,  20  Am. 

N.  Y.  256  ;  s.  c,  25  Am.  Rep.  182.   Ar-  Dec.  424. 

menia  Ins.  Co.  v.  Paul,  91  Penn.  St.  '  Browning  v.    Home   Ins.   Co. ,  71 

520;  s.  c,  3fi  Am.  Rep.  676.  N.  Y.  508. 

»  Carter  v.  Boehm,  3  Burr.  1903.  *  Wytheville  Ins.  Co.  v.  Stultz,  87 

»  Morrison  v.  Universal  Marine  Ins.  Vir.  629  (1891).     See  132  N.  Y.  133. 

Co.,  L.  R.,  8  Exch.  40.  'Green  v.   Merchants  Ins.   Co.,  10 

*  Smith  V.  The  Columbia  Ins.  Co.,  Pick.  402.    Bebee  v.  Hartford  Co.  Mut. 

17  Pa.   St.   253;  s.   c,   55  Am.  Dec.  Fire  Ins.  Co.,  25  Conn.  61;  8.  O.,  65 

646.      AUegre's  Admrs.  v.    Maryland  Am.  Dec.  668. 


§  48  Representations  and  Concealments.  59 

So  if  a  person  effected  an  insurance  upon  a  building  as  a 
private  house,  but  omitted  to  mention  tliat  its  windows  over- 
looked a  petroleum  store  or  floor-cloth  manufactory,  or  some 
other  equally  dangerous  structure,  the  policy  would  be  void  for 
concealment.^ 

§  48.  Representations. — A  representation  is  an  oral  or 
written  statement  of  facts  or  circumstances  made  at  the  time 
of  or  before  the  contract  relating  to  the  proposed  adventure, 
and  upon  the  faith  of  which  the  agreement  is  made. 

A  material  misrepresentation  of  fact  by  a  party  or  his 
authorized  agent,  whether  innocent  and  unintentional  or  fraudu- 
lent, avoids  the  contract.  Representations  must  be  substantially, 
complied  with._^ 

Thus  positive  representations  of  the  day  on  which  the  ship 
has  sailed,  or  will  sail,  or  on  which  she  was  last  seen  in  safety ; 
of  the  kind  of  armament  she  is  to  be  fitted  out  with ;  the  num- 
ber of  men  with  which  she  is  to  be  manned,  and  the  nature  of 
the  cargo  she  is  to  carry — will,  if  false,  avoid  the  policy,  unless 
the  assured  can  show  that  the  underwriter  was  in  no  respect 
influenced  by  them. 

For  example,  where  an  insurance  was  effected  on  ship  and 
cargo  at  and  from  Genoa  to  Dublin,  the  adventure  to  begin 
from  the  loading  to  clear  for  the  voyage.  Lord  Mansfield 
held  that  these  words  plainly  implied  a  representation  that  the 
vessel  had  loaded  or  would  load  at  Genoa  ;  and  as  it  appeared 
she  had  not  done  so,  but  at  Leghorn,  his  lordship  considered 
the  policy  void  for  misrepresentation  and  concealment.^ 

So  in  case  of  an  insurance  on  goods,  where  the  words  "  to 
return  five  per  cent  for  convoy  and  arrival "  were  inserted 
in  the  policy.  Lord  Eldon  was  of  opinion  that  these  words 
clearly  amounted  to  a  representation  that  it  was  probable  the 
vessel  would  sail  with  convoy ;  and  as  it  appeared  that  the 
assured  knew,  when  the  policy  was  effected,  that  the  ship  had 
actually  sailed  without  convoy,  the  contract  was  avoided.* 

A  policy  on  ship  and  goods  from  Nassau  to  the  Clyde  was 

'  Wedderbum  v.  Bell,  1  Camp.  1.  '  Hodgson  v.  Richardson,  1  W.  Bl, 

»  Smith  V.  ^tna  Ins.  Co.,  49  N.  Y.  463. 

211.     Continental  Ins.  Co.  v.   Kasey,  *  Reid  v.  Harvey,  4  Dow.  97. 
.85  Gratt  268  ;  s.  c,  18  Am,  Rep.  681. 


60  Insurance  :    Fire,  Life,  Marine.  §  49 

effected  on  the  18th  of  June,  1814.  The  broker  showed  the 
underwriters  a  letter,  <hited  April  2,  in  which  it  was  stated,  the 
Brilliant,  the  ship  insured,  "  will  sail  on  the  1st  of  May."  In 
fact,  the  ship  had  sailed  on  the  20th  of  April,  and  on  the  11th 
of  May  had  been  captured  by  an  American  privateer.  These 
facts  were  wholly  unknown  to  the  parties  by  whom  the  repre- 
sentation was  made,  yet  it  was  held  that  the  policy  was  avoided 
for  misrepresentation.^ 

And  vp^here  a  representation  was  made  some  time  before 
the  ship  sailed,  to  the  effect  that  she  was  to  sail  with  convoy 
and  a  certain  armament.  Lord  EUenborough  held,  that,  as  it 
had  not  been  substantially  complied  with,  it  avoided  the  policy, 
though  made  without  moral  fraud.^ 

The  insured  innocently  represented  that  he  had  two  hun- 
dred thousand  dollars  of  other  fire  insurance  upon  his  property, 
whereas,  in  fact,  there  was  only  thirty  thousand  dollars  of 
other  insurance :  the  court  was  of  opinion  that  this  over- 
estimate was  material,  and  that,  though  unintentional,  it  would 
avoid  the  contract.^ 

In  the  last  case  attention  was  also  called  to  the  fact  that 
the  rule  against  misrepresentations  and  concealments  is  more 
strict  in  marine  than  in  fire  insurance. 

§  49.  Mere  Opinion  not  generally  Fatal. — Misrep- 
resentations of  fact  must  be  distinguished  from  erroneous  ex- 
pressions of  opinion  or  belief  or  exaggerated  estimates  of  value. 
T'hese  usually  are  not  fatal,  unless  made  in  bad  faith.* 

Where  a  broker,  in  proposing  an  insurance  upon  certain 
vessels  engaged  in  the  African  trade,  stated  that  they  were 
expected  to  leave  the  coast  of  Africa  in  November  or  Decem- 
ber, when  in  fact  they  had  all  left  in  May,  it  was  held  that 
this  statement  having  been  made  without  intent  to  deceive, 
though  material  to  the  risk,  was  a  mere  expression  of  opinion, 
and  that  the  contract  was  not  void.* 

And  where  a  broker,  employed  to  effect  a  policy  on  goods 
for  a  party  who  had  no  interest  in  the  ship,  represented  that 

'  Dennistoun  v.  Lillie,  3  Bligh.  P.  C.  '  Armour  v.  Transatlantic  Fire  Ins 

202.  Co.,  90  N.  Y.  450. 

'^Edwards    v.    Footner,    1     Camp.  ^  Nat.  Bank  v.  Ins.  Co.,  95  U.  S.  673 

630.  Barber  v.  Fletcher,  1  Doug.  306. 


§  5 1  Representations  and  Concealments.  61 

the  ship,  which  was  then  at  Lisbfxi,  was  to  sail  in  a  few  days, 
and  the  ship  did  not  in  fact  sail  fo)'  a  month,  Lord  Ellen  borough 
held  that  this  statement,  though  material  to  the  risk,  but  made 
by  the  owner  of  the  goods,  who  had  no  control  over  the  time 
of  the  ship's  sailing,  must  be  regarded  merely  as  the  expression 
of  a  probable  expectation,  which,  as  it  appeared  to  have  been 
made  honajide,  would  not  avoid  the  policy.^ 

§  50.  Test  of  Materiality. — ^The^jnateriality  of  a  con- 
cealment or  representation  of  fact  depends  not  on  the  ultimate 
influence  of  the  fact  upon  the  risk  or  its  relation  to  the  cause 
of  loss,  but  on  the  immediate  influence  uppn  the  party  to  whom 
the  communication  is  made  or  is  due  in  forming  his  judgment 
at  the  time  of  effecting  the  contract.  The  party  thus  sought 
to  be  influenced  is  generally  the  insurance  company.  Though 
the  loss  should  arise  from  causes  totally  disconnected  with  the 
material  fact  concealed  or  misrepresented,  the  policy  is  void, 
because  a  true  disclosure  of  the  fact  might  have  led  the  com- 
pany to  decline  the  insurance  altogether  or  to  accept  it  only  at 
a  higher  premium.^ 

§  51.  Refers  to  what  Time. — The  closing  of  the  con- 
tract is  the  time  to  which  a  misrepresentation  or  concealment 
must  be  presumed  to  refer,  and  any  material  facts  coming  to 
the  knowledge  of  either  party  pending  the  negotiations  must 
be  communicated,  even  after  the  written  proposals  have  been 
submitted,  and  the  customary  methods  of  rapid  transmission  of 
news  must  be  employed.^  Until  the  completion  of  the  con- 
tract, representations  may  be  withdraw^n  or  qualified,  but  not 
afterwards  without  consent.*  In  England,  after  the  terms  of 
the  contract  have  been  virtually  settled  by  the  execution  of 
the  slip,  subsequently  acquired  knowledge  need  not  be  com- 
municated before  execution  of  the  policy,  although  a  marine 
insurance  is  not  valid  by  their  law  until  the  policy  is  executed.' 

'  Bowden    v.    Vaughan,    10    East,  '  Snow  v.  Mer.  M.  Ins.  Co.,  61  N.  Y. 

415.  160. 

»  Curell    V.    Miss.    M.    &    P.    Ins.  *  Freeland  v.  Glover,  7  East,  462. 

Co.,    9   La.    163;  s.  c,  29  Am.  Dec.  *  lonides  v.  Pacific  Ins.  Co.,  L.  B., 

489.  6  Q.  B.  m. 


CHAPTEE  V. 


GENERAL   PKIN0IPLE8 CONTINUED. 


> 


Warranties. 


»vf  §  5^»  What  is  a  Warranty. — An  express  warranty  is  a 
statement  of  tact  or  promise  of  performance,  relating  to  the  sub- 
ject of  insurance  or  to  the  risk,  inserted  in  the  policy  itself,  or 
by  reference  expressly  made  a  part  of  it,  which  must  be  literally 
true  or  strictly  complied  withj  or  else  the  contract  is  avoided.* 
^  A  representation,  as  has  been  observed,  is  a  collateral  induce- 
ment outside  the  contract,  and  need  be  only  substantially  com- 
plied with;  that  is  to  say,  if  it  is  immaterial  in  the  judgment  of 
the  jury  its  falsity  will  not  constitute  a  forfeiture. 

The  warranty  may  be  inserted  in  the  body,  margin,  or  at 
the  foot  of  the  policy,  but  it  must  appear  somewhere  upon  its 
face.'^  An  indorsement  upon  the  back  is  not  sufficient,  unless 
it  is  expressly  made  a  part  of  the  contract.^ 

No  particular  form  of  words  is  necessary  to  create  a  war- 
ranty, and  it  may  relate  to  the  past,  present,  or  future.  War- 
ranties form  the  basis  of  the  insurers'  obligation,  and  it  is  only 
upon  condition  of  their  complete  fulfillment  that  they  promise 
to  make  payment. 


§  53.  Warranty  must  be  Strictly  Performed. — In 

case  of  a  condition  or  warranty,  it  is  of  no  consequence  whether 
the  fact  stated  or  the  act  stipulated  for  be  material  to  the  risk 
or  not,  or  whether  the  insured  acted  in  good  faith  or  not :  the 
warranty  must  be  strictly  and  literally  performed.'* 


*  Thomson  v.  Weems,  9  App.  ("as. 
671.  Cushman  v.  U.  S.  Life  Ins.  Co  , 
63  N.  Y.  404.  Clark  v.  Union  Mut. 
Ins.  Co.,  40  N.  H.  333  ;  s.  c,  77  Am. 
Deo.  721. 


'  Wood  V.  Hartford  Ins.  Co.,  18 
Conn.  544 ;  s.  c,  85  Am.  Dec.  92. 

'  Murdock  v.  Chenango  Co.  Mut. 
Ins.  Co.,  2  Comst.  310. 

*  Pitch  V.  American  Popular  Life 
Ins.  Co.,  59  N.  Y.  557. 


§  53  "Warranties.  68 

Thus  a  broker,  in  offering  a  risk  to  the  underwriter,  showed 
the  latter  his  written  instructions,  which  comprised  a  statement 
respecting  the  vessel,  that  "  she  mounts  twelve  guns  and  twenty 
men  : "  in  point  of  fact,  the  vessel  had  not  this  precise  force  on 
board  ;  but  she  had  an  armament  of  guns  and  swivels,  with  a 
crew  of  men  and  boys,  which  in  both  particulars  were  equivalent 
to,  though  not  identical  with,  the  force  specified.  It  was  held 
that  the  statement  made  to  the  underwriter,  being  a  represen- 
tation, was  satisfied  by  the  substantial  fulfillment,  though  had 
it  been  a  warranty  nothing  less  than  a  strict  and  literal  fulfill- 
ment would  have  sufiiced.^ 

In  another  case,  the  words  "  in  port  20th  July,  1776,"  were 
written  in  the  margin  of  the  policy.  The  ship  was  proved  to 
have  sailed  on  the  18th  of  July,  and  Lord  Mansfield  held  this 
to  be  a  breach  of  warranty,  though  the  discrepancy  of  two 
days  might  not  make  any  material  difference  in  the  risk.^ 

In  another  case,  the  description  of  the  vessel  as  "  the  good 
American  ship  called  the  Rodman  "  was  held  a  warranty  that 
the  vessel  was  American.^ 

So  if  the  insured  by  his  fire  policy  warrants  that  there  is  no 
other  insurance  upon  the  property,  the  statement,  if  untrue, 
will  avoid  the  policy,  though  made  by  the  insured  in  ignorance 
of  the  fact,  and  though  wholly  immaterial  in  influencing  the 
insurers.^  So,  also,  if  he  omit  to  state  one  of  the  incumbrances 
upon  his  propert}',  in  answer  to  a  question  in  the  application 
calling  for  them,  the  policy  will  be  vitiated  if  the  answer  is 
warranted  to  be  full,  although  the  jury  find  the  fact  to  be 
immaterial.*  And  if  by  his  contract  of  life  insurance  he  war- 
rants that  he  was  not  engaged  in  selling  liquor,  the  validity  of 
the  policy  will  depend  upon  the  truth  of  the  statement.*  If, 
however,  the  insured  warrants  that  his  building  is  "  used  for 
the  storage  of  ice,"  that  may  be  quite  true,  although  at  the 
time  of  the  commencement  of  the  risk  there  is  no  ice  there.'' 
Many  illustrations  of  this  doctrine  will  be  considered  in  con- 
nection with  the  clauses  of  the  policies. 

'  Pawson  V.  Watson,  Cowp.  785.  '  Bowditch  Mut.  Ins.  Co.  v.  Winslow 

*  Bean  v.  Stupart,  Doug.  12  (note).       3  Gray  (Mass.),  415. 

'  Barker  v.  Phoenix  Ins.  Co.,  8  John-  '  Dwight  v.  Germania  Life  Ins.  Co., 

son.  307.  1U3  N.  Y.  341  ;  s.  c,  57  Am.  Rep.  239. 

*  Allen  V.  German-Am.  Ins.  Co.,  V^8  '  Dolliver   v.  St.  Joseph's  Fire  and 
N.  Y.  6.  Marine  Ins.  Co.,  131  Mass.  45. 


64  Insurance  :    Fire,  Life,  Marine.  §  54 

"Warranties  are  in  effect  made  representations  by  statutory 
provisions  in  some  of  the  States,  as  shown  in  the  appendix. 

It  ought  to  be  observed,  however,  that  in  making  prac- 
tical application  of  the  doctrine  of  warranty,  it  sometimes 
happens  that  the  alleged  breach  consists  in  honest  errors  or 
misstatements  in  their  character  so  trivial  and  irrelevant  to  the 
risk  as  to  fall  within  the  rule  de  minimis  non  curat  lex. 

The  court,  perhaps,  relied  upon  this  maxim  with  more 
regard  to  common  sense  and  justice  than  to  the  letter  of  the 
law  in  the  following  case,  where  a  vessel  was  registered  as 
captained  by  A,  in  order  to  comply  with  the  requirements  of 
the  registry  laws  which  forbid  an  alien  to  register ;  but  in  point 
of  fact  the  vessel  was  really  under  the  management  of  another 
person,  B,  who  was  an  alien,  but  a  competent  and  experienced 
captain,  whereas  A  had  had  no  nautical  experience  :  it  was  held 
that  the  representation  of  A's  captaincy  contained  in  the 
registry  would  not  avoid  the  contract.^ 

Similarly,  in  another  case,  the  same  court  held  that  a  fire 
policy  was  not  avoided  by  the  existence  of  a  small  building 
within  seventy-five  feet  of  the  storehouse  insured,  which  did 
not  aft'ect  the  risk,  although  the  insured  had  warranted  that 
the  storehouse  was  detached  at  least  one  hundred  feet  on  the 
east  side  of  Lake  Champlain.' 

§  54.  Inability  to  Perforin  the  Contract  no  Ex- 
cuse.— The  inability  of  the  insured  to  comply  with  the 
requirements  of  his  warranties  offers  no  excuse,  unless  the 
insurers  are  in  some  way  responsible  for  the  omission. 

The  insurers  have  promised  to  pay  only  upon  condition 
that  the  insured  shall  fulfill  the  contract  upon  his  part,  not 
upon  condition  that  he  shall  find  it  convenient  or  possible  to 
do  so.^ 

This  rule  is  applicable  to  the  payment  of  premiums  when 
made  a  condition  precedent,  and  also  to  all  the  other  warran- 
ties in  the  policy.  But  the  requirements  of  the  policy  regard- 
ing the  form  and   particularity  of  the  proofs  of  loss,   while 

'  Draperv.  Com.  Ins.  Co. ,  21 N.  Y.  ;i78.  '  School  District  m.  Dauchy,  25  Conn, 

»  Burleigh  v.  Gebhard  Fire  Ins.  Co.,  530.    Evans  v.  U.  S.  Life  Ins.  Co.,  64 

90  N.  Y    220.     Baldwin   v    Citizens  N.  Y.  304. 

Fire  Ins.  Co.,  60  Hun  389  (1891). 


§  56  W.\I{UANTIES.  65 

imposing  an  absolute  obligation  upon  the  insured  to  furnish 
proofs  unless  the  company  excuses  it,  are  held  to  mean  only 
such  reasonable  proofs  as  the  circumstances  of  the  case  will 
permit.^ 

Sickness,  insanity,  deatb,^  and,  according  to  some  authorities, 
even  war^  will  furnish  no  excuse  for  the  violation  of  a  condi- 
tion in  the  ])olicy.  But  the  United  States  Su[)reme  Court  and 
ot  her  courts  have  adopted  the  rule,  that  a  war  overrides  the 
ordinary  obligations  of  tlu!  policy,  and  simply  suspends  them 
until  the  war  is  terminated.  However  reasonable  this  rule 
may  be,  considered  logically,  it  is  inconvenient  and  difficult  to 
apply,  and  the  life  policy  may  furnish  some  exception/ 

Various  classes  of  statutes  which  have  been  passed  by  the 
legislatures  of  different  States  to  relieve  from  technical  forfeit- 
ures are  given  in  the  appendix. 

§  55.  Papers  Referred  to  in  the  Policy. — A  state 
ment  in  a  papei*  merely  referred  to  in  the  polic\'  is  not  a  war- 
ranty ;  but  if  the  polic}^  as  it  almost  invariably  does,  makes 
the  application  plan  or  survey  a  part  of  the  contract,  then  the 
statements  of  fact  therein  contained,  whether  relating  to  the 
past,  present,  or  future,  become  warranties.^ 

§  56.  Statement  of  Present  Use. — A  statement  of 
the  nature  of  the  present  use  of  the  property,  if  it  does  not  go 
to  the  essential  nature  of  the  subject  of  insurance,  is  not  gen- 
eralh"  considered  a  warranty  of  continuance. 

For  example,  in  a  late  case  the  United  States  Supreme 
Court  were  of  opinion  that  a  warranty  in  a  contract  of  fire  in- 
surance, that  smoking  was  not  allowed  on  the  premises,  if  true 
when  the  representation  was  made,  would  not  be  broken 
though  the  assured  or  others  smoked  afterwards  on  the  prem- 

»  Burastead  v.   Dividend  Mut.   Ins.  Wall.   158.     Cohen  v.  Mut.   Life  Ins. 

Co..  12  N.  Y.  81.  Co.,  50  N.  Y.  GIO.     N.  Y.  Life  Ins.  Co. 

'  Thompson  v.  Ins.  Co.,  104  U.  S.  v.  Statham,  93  U.  S.  24. 
252.     Carpenter   v.    Centennial   Mut.         ^  Ciishman  v.  U.  S.  Life  Ins.  Co.,  63 

Life  Ins.   Co.,  68  Iowa.  453.     Howell  N.  Y.  404.      Fitch  v.    Amer.  Popular 

V.  Knickerbocker  Life.  44  N.  Y.  277.  Life  Ins.  Co.,  59  N.  Y.  557  ;  s.  c.,  17 

'  Worthington  v.  Charter  Oak  Life  Am.  Hep.  372.      Dwight  v.  Germania 

Ins.  Co.,  41  Conn.  Wl.  Life  Ins.  Co.,  103  N.  Y.  341  ;  s.  c,  57 

*Semmes  v.  Hartford  Ins.   Co.,  13  Am.  Rep.  729. 
5 


V 


66  Insurance  :    Firk,   Lifk,  Marine.  §  57 

ises.^      So   also    where  the  polic}'   of  insurance   described  the 
property  insured  as  being  a  two-story  frame  building  used  for 
winding  and  coloring  yarn  and  for  the  storage  of  spun  yarn,  it 
did  not  warrant  that  such  building  was  to  continue  to  be  thus 
used.'^     But  a  warranty  that  a  house  was  of  stone  when  in 
reality  it  was  parti}"  stone  and  partly  wood,  or  that  the  building 
insured  was  a  dwelling  house,  or  occupied  as  a  dwelling,  when  in 
fact  it  was  not,  would  avoid  the  policy.^     If  the  warranty  were 
simply  that  the  house  was  a  dwelling,  that  would  not  neces- 
sarily mean  that  it  was  occupied  as  a  dwelling  at  that  time.* 
I        In  marine  insurance  the  rule  is  particularly  strict  that  any 
I  statement  relating  to  the  property  insured  appearing  upon  the 
!  face  of  the  policy  will  be  regarded  as  a  warranty.^ 

§57.    Questions   unanswered    or    partially    an- 
swered.— If  a  question  in  the  appHcation  is  not  answered  at 
all,  or  if  the  answer  is  not  false  in  any  respect,  but  upon  its 
\^  face  is  only  incomplete,  there  is  no  breach  of  warranty,  pro- 
\^      vided  the  insurer  accepts  the  application   without  objection  ; 
\^  for,  if  not  satisfied,  the  company  should  demand  fuller  informa- 

it>  tion.     So,  also,  to  avoid  forfeiture,  equivocal  answers  are  con- 

^  strued  most  strongly  against  the  company,  but  notwithstand- 

ing  this,  the  applicant   must  answer  in  good  faith   and    not 
attempt  to  evade,  conceal  or  mislead.* 

§  58.  A  Breach  avoids  though  not  Connected 
with  the  Loss. — ^Although  the  breach  of  warranty  or  the 
misrepresentation  or  intentional  concealment  of  a  material 
fact  may  not  contribute  to  or  cause  the  loss,  nevertheless  the 
policy  is  avoided,  for  the  risk  becomes  a  di£ferent  one  from 
that  which  the  insurer  undertook  to  bear.'' 

'  Hosford  V.  Germania  Fire  Ins.  Co.,  '  London  Ass.  Co.  v.  Mansel,  L.  R., 

127  U,  S.  399.  IK'h.  D.  363.     Phenix  Life  Ins.  Co. 

2  Smith   V.   Mechanics  and  Traders  v.  Raddin,  m  U.  S.  183.     Dilleber  v. 

Fire  Ins.  Co..  32  N.  Y.  399.  Home  Life  Ins.  Co'.,' 69  N.  Y.  256  ;  s. 

'  Chase  v.  Hamilton  Ins. Co.,  20N.  Y.  c,  25  Am.  Rep.  182.     Carson  v.  Jersey 

62.     Alexander  v.  Germania  Fire  Ins.  City  Fire  Ins.   Co.,  43  N.  J.  L.  306. 

Co.,  60  N.  Y.  464  ;  s.c,  23  Am.  Rep.  7G.  Higgins  v.  Phoenix  Mut.  Ins.  Co.,  74 

•  Browning  v.  Home  Ins.  Co.,  71  N.  N.  Y.  6. 

Y.  508.  '  Bank  of  Balston  Spa  v.  Ins.  Co.,  50 

'  Thomson  v.  Weems,  9  App.  C»s.  N.  Y.  45.     Ripley  v.   Mtvidi.  Ins.  Co., 

(S84.  30  N.  Y.  136  ;  s.  c,  86  Am.  Dec.  362 


§  62  Warranties.  6T 

^  59.  Breach  avoids  tlioiijfli  only  Temporary.-- 

If  a  bi'cach  oH  warranty  occurs  during  tlie  life  of  a  policy  and 
continues  temporarily  only,  by  the  weight  of  authority  and 
reason  it  avoids  and  does  not  merely  suspend  the  policy/  un- 
less the  insurer  or  its  duly  authorized  agents,  with  knowledge 
of  the  forfeiture,  revive  the  contract  by  some  unequivocal  act 
of  confirmation ;  as,  for  example,  by  the  acceptance  of  a  pre- 
mium or  assessment,  or  by  the  delivery  of  the  policy  or  a 
renewal  receipt,  or  by  an  express  waiver  of  the  forfeiture  by 
consent.^ 

§  60.  To  avoid  Forfeiture,  Contract  made  Sev- 
erable.— Where  several  items  of  property  are  insured  for  /^«  ^ 
separate  amounts,  either  at  separate  rates  or  for  a  single  pre- 
mium, and  tlie  breach  of  warranty  affects  a  portion  of  the  -^C^^ 
items  only,  then,  according  to  the  weight  of  authority,  the  con- 
tract is  severable  unless  it  contains  words  as  in  the  case  of  the 
New  York  standard  fire  policy,  showing  distinctly  that  the 
entire  contract  is  to  be  avoided  by  the  breach.^ 

§  61.  Void  means  Voidable. — Though  the  contract  is 
said  to  be  avoided  by  the  violation  on  the  part  of  the  insured 
of  any  of  the  conditions  or  warranties  inserted  for  the  benefit 
of  the  insurers,  this  means  that  the  contract  is  voidable  at  the 
option  of  the  insurers.^ 

§  63.  Election  once  made  is  Final. — If  with  knowl 
edge  of  the  forfeiture  the  insurer  elects  to  revive  the  contract. 
and  evinces  his  election  b}^  an  unequivocal  and  positive  act  of 
confirmation,  he  cannot  thereafter  insist  upon  the  past  breach." v/' 

'  Kyte   V.    Commercial   Union   Ass.  Ins.  Co.,  TS  N.  Y.  459  ;    s.  c,  29  Am. 

Co.,    149    Mass.    116.      Fernandez   v.  Rep.  184.      Contra  Mtna  Ins.  Co.  v. 

Great  Western  Ins.  Co.,  48  N.  Y.  571.  Resh,  44  Mich.  55  ;  s.  c,  38  Am.  Rep. 

Coffin  V.  Newburyport  Mar.  Ins.  Co.,  9  2P8.    See  note  at  p.  230. 

Mass.  436.  *  Shearman  v.  The  Niagara  Fire  Ins. 

i*  Rice  V.  New  Eng.   Mut.  Aid  So.,  Co.,  46  N.  Y.,  526  ;  s.  c,  7  Am.  Rep. 

146  Mass.  248.     Weed  v.  London  and  380. 

L.  Fire  Ins.  Co.,  116  N.  Y  100.  "  Masonic  Mutual  Benefit  Asso.   v. 

"  Schuster  v.  Dutchess  Co.  Ins.  Co.,  Beek,  77  Ind.  203  ;  s.  c,  40  Am.  R«p 

lOaN.Y.  260.    Merrill  V.  Agricultural  295. 


CHAPTER   YI. 

GENERAL    PRINCIPLES — CONTINUED. 

Waiver  and  Estoppel. 

§  63.  Nature  of  Waiver  and  Estoppel. — Waiver  is 
the  voluntary  relinquishment  of  a  known  right.'  Estoppel  in 
pais  is  the  bar  which  equity  raises,  in  the  interest  of  fair  dealing, 
to  prevent  the  one  party  from  enforcing  certain  rights  which 
it  possesses  under  the  'letter  of  the  contract  to  the  detriment  of 
the  other  party,  where,  by  its  declarations,  agreement,  or  con- 
duct, it  has  induced  the  other  party  to  rest  secure  in  the  belief 
that  such  rights  have  been  relinquished.^  While  waiver,  prop- 
erly speaking,  is  the  voluntary  abandonment  of  a  contract 
right,  estoppel  includes  those  cases  where  an  abandonment  is 
inferred  or  imposed  by  the  court  from  the  nature  of  the  con- 
duct of  the  party  who  would  otherwise  be  entitled  to  the 
right.  The  words  waiver  and  estoppel,  however,  are  often 
used  interchangeably  by  the  courts. 

The  party  that  generally  waives  or  is  estopped  in  insurance 
law  is  the  insurer.  To  support  the  doctrine  of  waiver  and 
estoppel  it  is  not  necessary  that  any  new  or  specific  considera- 
tion be  exchanged,  because,  except  for  rehance  upon  the  belief 
induced  by  the  conduct  of  the  insurer  in  question,  it  is  to  be 
presumed  that  the  insured  would  have  taken  out  other  insur 
ance  for  his  protection  ;  but  even  in  respect  to  the  provisions  of 
the  contract  to  be  performed  by  the  assured  after  loss  no  new 
consideration  need  be  shown  to  sustain  a  waiver  or  estoppel.^ 

§  64.  What  in  General  constitutes  a  Waiver  or 
Estoi)pel. — Any  unequivocal  and  positive  act  of  the  company 

'  Pinderson  v.  Metropole    Fire  Ins.         '  Prentice  v.  Knickerbocker  Life  Ins. 
Co.,  57  Vt.  520.  Co.,  77  N.  Y.  483. 

'  Union  Ins.    Co.  v.  McGookey,  33 
Ohio  St.  555. 


§  66  Waivkr  and  Estoppel.  69 

recognizing  the  policy  as  valid  after  a  knowledge  of  its  breach, 
or  any  act  that  puts  the  insured  to  unreasonable  ex))ense  or 
trouble  in  the  justifiable  belief  tiiat  the  company  still  I'egards 
the  policy  as  valid,  will  estop  the  company  from  taking  advan- 
tage of  the  forfeiture.* 

By  the  higliest  authority  the  rule  is  stated  thus:  "  AnjTV 
agreement,  declaration,  or  course  of  action  on  the  part  of  an 
insurance  company  which  leads  a  party  insured  honestly  to 
believe  that  by  conforming  thereto  a  forfeiture  of  his  policy 
will  not  be  incurred,  followed  by  due  conformity  on  his  part, 
will  and  ought  to  estop  the  company  from  insisting  upon  the 
forfeiture,  though  it  might  be  claimed  under  the  express  letter y/ 
of  the  contract."  ^  ^ 

§  65.  What  the  Insured  seeks  to  Accomplish  by 
invoking:  tliis  Doctrine. — As  the  question  ordinarily 
arises  in  practice,  the  insured,  when  he  claims  a  waiver  or  an 
estoppel,  is  not  aiming  at  a  reformation  of  the  policy  in  equity, 
nor  at  a  rescission  for  fraud  or  mistake,  for  generally  it  would, 
be  difficult  for  him  to  establish  good  grounds  for  a  reformation 
in  such  cases,  and  after  loss  a  rescission  would  afford  inadequate 
relief  and  would  not  come  within  the  jurisdiction  of  a  jury. 
Therefore  the  insured  ordinarily  brings  his  action  of  contract 
_U£on__the_policj,  and  under  the  doctrine  of  waiver  and  estoppel 
may  be  allowed  to  recoverj_althou^h  upon  the  face  of  the  writ-] 
ten  contract,  in  conjunction  with  the  testimony  of  his  own  wit- 
nesses, no  cause  of  action  is  established  against  the  insurers.'      1 

§  66.  Tlie  Disturbance  of  Contract  brouglit  about 
by  Parol  Testimony. — This  fact  is  of  grave  import,  and 
upon  it  turn  many  of  the  difficult  questions  which  arise  in  the 
apphcation  of  the  doctrine  of  waiver  and  estoppel  to  the  insur- 
ance contract.  Thus,  to  illustrate  :  The  policy  makes  the  state- 
ments of  the  written  application  warranties.  The  written 
application,  vouched  for  by  the  insured,  contains  certain  very 
important  representations  :  for  example,  it  states,  perhaps,  that 

'  Viele  V.  flermania  Ins   ('o.,  26  la.     Kenyon  v.  Knights  Templar,   122  N. 
9 ;    s.  c,    96    Am.    Dec.    83.     Titus    Y.  26?. 

V.  Glens  Falls  Ins.  Co.,  81  N.  Y.  Miowley  v.  Empire  Ins.  Co.,  3C  N. 
410.  Y.  5r)0      Van  Schaiuk  v.  Niagara  Fire 

"  Ins.  Co.  V.  Eggleston,  96  U.  S.  572.     Ins.  Co.,  68  N.  Y.  434. 


'TO  Insurance  :   Fire,  Life,  Marine.  §  67 

his  age  was  thirty -five,  or  that  he  never  had  consumption,  or 
that  he  has  taken  out  no  other  insurance,  but  on  the  trial  of 
the  action  brought  by  the  insured  against  the  company  on  its 
pohcy  the  uncontradicted  testimony  shows  that  his  age  was 
forty,  or  that  he  had  been  afflicted  with  consumption,  or  that 
he  had  taken  out  other  insurance.  Under  the  doctrine  of 
waiver  and  estoppel,  however,  the  plaintiff  is  permitted  to 
show  by  oral  testimony'  that  the  company  or  its  agent,  duly 
authorized,  had  knowledge  of  the  truth  of  that  which  was  mis- 
stated in  the  application,  and  issued  the  polic\^  in  full  possession 
of  such  knowledge,  or  that  the  applicant  made  a  true  statement 
to  the  compan}^  or  its  representative,  and  is  not  responsible  for 
the  erroneous  answers,  which,  he  tells  the  jury,  were  errors 
of  the  company's  agent  in  filling  up  the  application.  Or,  again, 
the  policy  says  that  the  contract  shall  be  void  if  mechanics  are 
employed  in  making  repairs  for  more  than  fifteen  days  at  any 
one  time,  or  if  the  building  remains  unoccupied  for  more  than 
ten  days  without  written  consent  indorsed  on  the  policy. 
These  warranties  are  broken  ;  but  under  the  doctrine  of  this 
rule  of  waiver  the  plaintiff  is  allowed  to  testify  orally  in  excuse 
for  the  breach  of  the  written  contract  that,  during  the  life  of 
the  policy  and  before  he  paid  the  last  premium,  he  was  told  by 
the  company  or  some  one  of  its  officials  that  he  was  relieved 
from  the  contract  requirements  as  to  these  particulars.^ 

The  leading  case  of  Plumb  v.  Cattaraugus  Ins.  Co.  is  said  to 
have  changed  the  law  for  New  York.^  And  this  was  conceded 
by  the  New  York  Court  of  Appeals  in  a  later  case.'  But  the 
doctrine  of  oral  waivers  as  adopted  by  New  York  received  the 
high  sanction  of  the  Federal  Supreme  Court  in  the  Wilkinson 
case,  and  has  met  with  full  approval  in  almost  all  of  the  States. 

§  67.  Effect  of  this  Doctrine  on  the  Ordinary  Rule 

of  Evidence. — It  is  often  said  that  the  doctrine  of  waiver 
and  estoppel  does  not  contradict  the  terms  of  the  policy,  and  is 
not  repugnant  to  the  rule  that  the  written  contract  merges  all 

'  Plumb  V.  Cattaraugus  Ins.  Co.,  18  -  Dewees  v.   Manhattan  Ins.  Co.,  6 

N.  Y.  392.    Richmond  v.  Niagara  Fire  Vroom.  374. 

Ins.  Co.,  79  N.  Y.  230.     Ins.   Co.  v.  '  Rowley  v.  Empire  Ina.  Co.,  38  N. 

Wilkinson,  13  Wall.  222.     Baldwin  v.  Y.  550. 
Citizens'  Ins.  Co.,  60  Hun.  889. 


§  68  Waivkr  and  Estoppel.  71 

prior  negotiations.  This  would  be  true  if  the  plaintiff  should 
bring  his  action  to  annul  the  contract;^  but  where,  as  is  usual, 
the  action  is  brought  to  recover  upon  the  policy,  it  would  seem 
to  be  more  sensible  and  accurate  to  concede,  that,  so  far  as  this 
doctrine  tolerates  parol  evidence  of  knowledge  by  the  insurers  / 
prior  to  the  contract  of  facts  at  variance  with  its  stipulations, 
and  permits  the  insured  to  give  his  oral  version  of  antecedent 
negotiations  and  transactions,  it  does  constitute  a  substantial 
departure  from  the  ordinary  rule  of  evidence:  for  a  doctrine 
which  denies  all  force  and  effect  to  an  unambiguous  clause  of  a 
written  contract,  to  all  moral  intents  and  purposes,  expunges 
the  clause  from  the  contract  altogether.^ 

§  68.  Reasons  in  Favor  of  Waiver  and  Estoppel 
in  Certain  Cases. — The  policy  is  prepared  in  the  interest  of 
the  insurers.  The  applicant  must  take  it  or  nothing.  Its  con- 
ditions are  numerous  and  complex,  and  often  the  insured  does 
not  receive  it  until  after  the  contract  is  closed.  Hence  he  may 
have  no  opportunity  to  compare  it  with  the  application.  It 
in  fact  is  not  the  record  of  his  intent,  nor  does  it  sum  up  his 
antecedent  negotiations  with  the  company,  except  with  respect 
to  those  parts  of  the  policy  which  are  in  writing. 

It  would  not  be  consonant  with  fair  dealing  to  permit  an 
insurer  in  return  for  the  premium  to  deliver  a  pretended  con- 
tract of  insurance,  while  knowing  all  the  time,  from  the  very 
threshhold  of  the  transaction,  that  a  forfeiture  is  already 
incurred  by  reason  of  a  violation  of  some  printed  condition, 
and  that  therefore  the  policy  is  of  no  more  avail  to  the  insured 
than  a  piece  of  waste  paper.  Again,  it  would  not  be  right  to 
hold  the  insured  responsible  for  errors  in  the  application,  where 
their  insertion  was  the  act  of  the  company  or  its  representative, 
without  any  concurrent  carelessness  or  fault  on  the  part  of  the 
insured,  for  in  such  a  case  the  alleged  breach  of  contract 
really  is  not  the  act  of  the  insured  at  all.  Again,  where  the 
policy  during  its  life  or  after  loss  becomes  voidable  at  the 
election  of  the  insurers,  their  unequivocal  act  of  confirmation 
with  knowledge  of  the  forfeiture  ousfht  to  be  taken  as  con- 
elusive  evidence  of  the  exercise  of   their  right  of   option  to 

'  Pitney  v.  Glens  Falls  Ins.  Co.,  '65        '^  Franklin  Fire  Ins.  Co.  v.  Martin, 
N.  Y.  25.  .  40  N.  J.  L.  568. 


72  Insurance:    Fire,   Life,  Marine.  §69 

abandon  the  forfeiture,  and  to  revive  and  continue  the  insur- 
ance for  the  benefit  of  both  parties. 

§  69.  Reasons  against  the  Doctrine  of  Waiver 
and  Estoppel  in  Certain  Cases. — The  written  instru- 
ment is  supposed  to  be  the  final  and  most  truthful  evidence 
of  the  result  of  the  negotiations,  and  if  not  good  for  that  is  a 
meaningless  formality.  To  go  outside  of  it  is  to  encourage 
falsehood  and  fraud,  and  in  the  adjustment  of  insurance  rates 
must  ultimately  result  either  in  disaster  to  the  insurers  and 
their  stockholders,  or  in  saddling  upon  innocent  persons  in 
some  form  the  losses  caused  by  unscrupulous  claimants,  who,  if 
not  concluded  by  the  terms  of  the  written  contract,  will  suit 
their  oral  testimony  to  the  exigencies  of  their  case.  The 
applicant  knows,  or  ought  to  know,  that  the  statements  in 
the  application,  whether  right  or  wrong,  constitute  all  that  the 
home  office  has  before  it  in  estimating  and  deciding  upon  the 
risk,  and  fixing  the  rate  of  premium.  He  knows,  or  ought  to 
know,  that  the  insurers  have  never  given  any  authority  to 
their  agent  to  distort  or  secrete  from  them  any  facts  bearing 
upon  this  subject ;  and  he  knows,  or  ought  to  know,  that  the 
policy  contains  the  complete  and  binding  provisions  of  the  con- 
tract. Under  the  doctrine  of  waiver  and  estoppel  it  sometimes 
happens  that  the  insured  is  allowed  to  recover  upon  a  policy  in 
spite  of  the  forfeiture  which  appears  upon  its  face,  where,  if  the 
facts  disclosed  for  the  first  time  at  the  trial  had  been  made 
known  to  the  compan}^  in  advance,  it  would  have  declined  the 
risk  altogether.  Thus  there  is  sometimes  thrust  upon  the 
insurers,  by  a  doctrine  of  law,  a  contract  which  they  have 
neither  made,  nor  upon  the  testimony  disclosed  at  the  trial 
would  have  made  if  they  had  known  it.  Such  a  result  would 
seem  to  be  grossly  inequitable ;  but,  on  the  other  hand,  to 
allow  the  admissibility  of  this  doctrine  to  turn  upon  a  mere 
speculation  as  to  whether  the  insurers  would  or  would  not 
have  accepted  the  risk,  if  they  had  known  the  truth,  is  to 
make  confusion  worse  confounded.  Furthermore,  such  a  course 
might  sometimes  be  unjust  to  the  assured,  if  innocent,  for  mean- 
while he  may  have  lost  the  opportunity  of  getting  other  insur- 
ance, and  may  be  ignorant  of  any  ground  of  forfeiturv3  until 
apprised  of  it  in  the  course  of  a  law-suit  upon  the  policy. 


§  71  Waiver  and  Estoppel.     .  73 

§  70.  How  this  Doetrino  has  operated  in  Prac- 
tice.— The  doctrine  of  waiver  unci  estoppel  by  agents  of  insur- 
ance companies  located  outside  the  home  office  is  largely  a 
development  of  recent  years,  and  covers  one  of  the  most  per- 
plexing subjects  to  be  found  in  the  law  books.  It  has  often 
fostered  the  claims  of  unscrupulous  men,  it  has  been  fruitful  in 
litigations,  and  has  had  a  tendency  to  drive  the  companies  into 
an  illiberal  policy  in  framing  their  contracts  and  in  adjusting 
their  losses.  Such  action  of  the  companies  has  stimulated  the 
courts  in  turn  to  adopt  a  moi-e  and  more  rigorous  application  of 
the  doctrine  against  the  insurers,  and  has  called  forth  frequent 
and  varied  interference  by  the  legislatures  of  most  of  the 
States.  Thus  this  whole  branch  of  the  law  has  been  thrown 
into  confusion  and  uncertainty. 

The  cases  upon  this  subject  constitute  a  considerable  portion 
of  the  law  of  insurance  in  the  United  States,  more  so  than  in 
England,  and  many  of  the  opinions  of  our  courts  of  last  resort 
set  forth  in  them  are  hopelessly  at  variance  with  one  another. 
Notwithstanding  all  this  the  doctrine  is  firmly  established,  and 
in  many  of  its  applications  is  just  and  salutary,  and  when  wisely 
enforced  may  be  consonant  with  principles  which  are  now 
thoroughly  recognized  both  here  and  in  England.* 

Upon  a  careful  review  of  the  English  and  American  authori- 
ties, Professor  D  wight,  as  one  of  the  commissioners  of  the  New 
York  Court  of  Appeals,  came  to  the  conclusion  that  the  doc- 
trine of  waiver  and  estoppel  by  parol  evidence  as  applicable  to 
written  contracts  of  insurance  is  not  inconsistent  with  the  gen- 
eral principles  of  the  law.^ 

§71.  Cause  of  the  Conflict  of  Opinion  in  apply- 
ing tlie  Doctrine. — The  striking  divei-gence  of  opinion  to 
be  found  in  the  reports  of  American  insurance  cases  upon  the 
subject  of  waiver  and  estoppel  is  not  due  to  indifference  or  care- 
lessness on  the  part  of  the  judiciary  in  developing  this  import- 
ant branch  of  the  law,  but  rather  to  certain  embarrassing 
peculiarities  of  fact  which  appertain  to  the  making  and  operation 
of  insurance  contracts.     The  insurers  being  corporations  can  act 

'  Morrison  v  Univeisal  Marine  Ins.  ''  Pitney  v.  Glens  Palls  Ins.  Co.,  65 
Co.,  L.  R.,  8  Exeh  40.  Piekard  v.  N.  Y.  6.  Pechner  v.  Phcenix  Ins.  Co. , 
Sears,  6  Ad.  &  Ell.  475.  65  N.  Y.  195. 


74  Insurance  :    Fire,  Life,  Marine.  §  71 

only  through  agents,  and,  as  was  exphuned  in  the  first  or  intro- 
ductory ciiapter,  tlie  powers  of  these  agents  are  varied  and  often 
ill-delined.  Ver}^  few  of  them  can  strictly  be  called  general 
agents  in  the  sense  in  which  that  term  is  usually  understood  in 
the  law,  though  the  powers  given  to  agents  by  American  fire 
companies  are  apt  to  be  broader  than  the  powers  of  local  agents 
of  English  companies  in  England.  The  applicant  for  insurance 
knows  little  about  the  scope  of  tlie  agent's  actual  instructions. 
In  making  request  for  fire  or  life  insurance  he  often  signs  a 
voluminous  written  application  which  is  forwarded  to  the  home 
office  before  he  sees  the  ])olicy.  The  premium,  too,  is  some- 
times paid  and  the  contract  closed  before  the  policy  is  deliv- 
ered. The  policy,  when  received,  perhaps  gives  to  the  insured 
a  notice,  in  the  form  of  a  stipulation,  that  the  company,  after  it 
has  taken  advantage  of  its  agent's  acts,  proposes  to  repudiate 
ex  post  facto  all  responsibility  for  tlieni.  The  policy  states  that 
tlie  agent  is  to  be  deemed  the  agent  of  tlie  insured  in  what  has 
already  ha])]iened,  or  that  no  one  is  to  be  deemed  an  agent  for 
the  company  unless  he  has  a  written  commission,  or  that  no 
agent  or  officer  or  any  representative  of  the  company  can  waive 
provisions  of  the  contract  except  in  writing  indorsed  on  the 
policy.  If  a  life  policy,  it  states,  probably,  that  no  payment  of 
premium  is  valid  unless  paid  in  cash,  and  that  no  payment  of 
premium  can  be  made  except  in  return  for  a  written  receipt 
signed  by  some  desigiaated  officer  or  officers.  Meanwhile  the 
home  office  may  or  may  not  have  received  the  premium.  A 
loss  or  death  insured  against  may  or  may  not  have  occurred. 
The  recitals  or  stipulations  in  the  policy  concerning  the  author- 
ity of  the  agent  may  or  may  not  correspond  with  the  ostensible 
authority  which  the  agent  was  held  out  by  the  company  to  pos- 
sess before  delivery  of  the  policy.  They  may  or  may  not  accord 
with  the  actual  authority  given  to  the  agent  by  the  company, 
of  which,  from  the  nature  of  things,  the  best  and  primary  evi- 
dence must  exist  outside  the  policy.  It  will  readily  be  seen 
that  the  distinctions  likely  to  arise  are  many  and  nice ;  that  a 
conflict  of  opinion  may  oftentimes  be  apparent  rather  than 
real,  and  that  it  is  not  safe  to  take  the  remarks  of  a  court  in 
one  case  and  apply  them  recklessl}'  to  the  varying  circum- 
stances of  another  case,  or  to  jump  to  the  conclusion  that  the 
comments  of  a  judge  in  the  course  of  some  particular  discussion 


§  7i  Waiver  and  Estoppel.  75 

are  necessarily  intended  to  sei've  as  tlu;  eimnciationof  a  general 
rule.  The  necessity  for  such  a  warning  may  be  well  illustrated 
by  reference  to  three  very  recent  cases,  decided  within  a  single 
year  by  a  court  that  perha{)S  has  given  more  successful  study 
and  learning  to  this  branch  of  the  law  than  any  other  court  in 
the  country. 

In  the  case  of  Arff  v.  Sun  Fire  Ins.  Co.,  125  N.  Y.  57 
(1890),  the  court  advances  the  opinion  that  an  ordinary  agent 
of  an  insurance  conipanv  has  the  power  to  employ  clerks 
empowered  to  discharge  the  ordinary  business  of  his  agency, 
and  that  a  waiver  of  a  character  which  the  agent  himself  could 
make  is  to  be  attributed  to  liim  when  made  by  his  clerk;  that 
the  maxim  of  delegatus  non  potest  delegare  does  not  apply  to 
such  a  case,  and  that  the  knowledge  of  a  clerk  of  the  agent  of 
the  compan}^  that  there  was  other  insurance  was  the  knowl- 
edge of  the  agent  of  the  company,  and,  therefore,  knowledge  of 
the  company  itself,  and  sufficient  to  estop  it  from  taking  advan- 
tage of  a  clause  in  the  policy  under  which,  otherwise,  the 
policy  would  have  been  avoided. 

The  real  point  of  the  case,  doubtless,  was  that  the  subagent 
was  believed  to  have  authorit}''  emanating  by  recognition  from 
the  company  itself  to  receive  notice  of  other  insurance  in  pursu- 
ance of  a  provision  of  the  policy.  The  inference  ought  not  to  be 
drawn  from  this  decision  that  a  solemn  written  contract,  which 
to  have  any  validity  at  all  may  perhaps  require  to  be  signed 
by  the  president  and  secretary  of  a  corporation,  and  counter- 
signed by  its  general  agent,  is  to  be  placed  wholly  at  the 
mercy  of  an  irresponsible  subagent,  who  is  neither  selected, 
controlled,  paid,  or  discharged  by  the  company  ;  nor  must  it 
be  inferred  from  the  language  of  the  learned  justice  who  pro- 
nounced the  opinion  of  the  court,  though  it  is  suggestive  of 
such  an  inference,  that  insurance  companies  are  to  be  deprived 
of  the  equal  protection  of  the  law. 

The  general  rule  relating  to  the  authority  of  subagents  and 
clerks  is  better  stated  in  the  recent  case  of  Waldman  v.  North 
British,  &c.,  Ins.  Co.,  91  Ala.  170,  in  which  it  was  held  that 
the  maxim  delegatus  non  potest  delegare  is  applicable  to  the 
agents  of  insurance  companies,  and  that  any  general  discretion- 
ary powders  granted  to  an  agent,  such  as  waiving  or  modifying 
the  terms  of  the  policy,  cannot  be  by  him  transferred  to  a  sub- 


t6  Insukance:    Fire,   Life,  Marine.  §71 

agent.  That  case  also,  as  well  as  the  Arff  case,  had  to  do  with 
waiving  the  clause  about  other  insurance. 

In  Wilber  v.  Williainsbucgh  City  Fire  Ins.  Co.,  122  N.  Y. 
443  (1890),  the  court  says:  "It  was  entirely  competent  for 
the  parties  to  agree  that  a  third  person  ])articipating  in  the 
negotiations  should,  for  the  ])urpose  of  pi'ociiring  the  policy, 
be  deemed  an  agent  of  the  assured."  Such  agent  "sliould  be 
deemed  the  agent  of  the  assured  until  after  the  inception  of 
the  contract.  Whether  he  thereafter  represent  the  assured  is 
dependent  upon  actual  authority  conferred  otherwise  than  by 
the  contract  of  insurance." 

From  this  language  it  must  not  be  understood  that  the 
court  really  intended  to  commit  itself  unqualifiedly  to  the 
proposition  that  the  actual  authority  of  an  insurance  agent  is 
to  be  considered  as  conferred  by  a  policy  of  insurance,  a  con- 
tract subsisting  between  the  company  and  a  third  party,  or 
that  a  stipulation  declaring  in  effect  that  all  agents  in  the 
transaction  are  to  be  deemed  agents  of  the  assured  would  be 
conclusively  binding  upon  the  assured  until  he  had  seen  the 
policy,  and  that  after  he  had  seen  the  policy  it  would  not  be 
binding  upon  him. 

Curiously  enough,  the  courts  of  Pennsylvania  and  Dakota, 
and  other  courts,  have  adopted  as  applicable  to  a  similar  stipu- 
lation in  the  policy  the  precise  converse  of  the  rule  which 
might  seem  to  be  indicated  by  the  case  last  referred  to,  and 
have  held  that  the  stipulation  or  notice  of  restriction  as  to 
agency  contained  in  the  policy  has  no  binding  force  at  all  until 
it  is  received  by  the  insured.^ 

In  Kenyon  v.  Knight  Templars,  122  N.  Y.  267  (1890),  the 
court  says :  "  The  mere  fact  that  the  agent  had  knowledge  or 
information  of  the  manner  the  assured  was  then  selling  liquors, 
did  not  necessarily  affect  the  right  of  the  defendant  to  assert 
and  make  available  the  defense  that  there  was  a  breach  of  war- 
ranty, if  the  answer  Avas  untrue.  That  was  provided  against  by 
a  provision  in  the  contract.  The  cases  in  which  knowledge  of 
the  agent  through  whom  insurance  is  taken  may  operate  to 
defeat  the  right  of  the  company  to  avail  itself  of  the  fact  so 

*  Kister  v.  Lebanon  Mut.  Ins.  Co.,  464.  South  Bend  Toy  Mfg.  Co.  v. 
128  Pa.  St.  653.  Eilenberger  v.  Pro-  Dakota  F.  &  M.  Ins.  Co.,  20  Ins. 
tective  Mut.  Fire  Ins.  Co.,  89  Pa.  St.     L.  J.  871  (South  Dak.,  1891). 


§  71  Waiver  and  Estoppel.  77 

known,  at  the  time  it  is  taken,  are  those  in  which  there  is  no 
apphcation  signed  by  the  assured,  stating  to  the  contrary  of 
such  existing  fact,  but  rest  upon  a  condition  expressed  in  the 
poHcy  merely.  Then  it  may  be  presumed  that  the  statement 
of  it  in  the  policy  as  required  by  the  condition  was  omitted 
by  mistake  or  waived.  Such  is  not  understood  to  be  the  rule 
when  the  alleged  breach  of  warranty  is  founded  upon  a  mis- 
statement by  the  assured  in  the  application  made  and  sub- 
scribed by  him." 

Here  the  court  seems  to  think  that  it  does  make  a  difference, 
after  all,  whether  the  insured  has  had  actual  or  only  construct- 
ive notice  of  restrictions  upon  the  agent's  power ;  but,  from  the 
language  of  the  court  just  quoted,  it  must  not  be  inferred  that 
a  mere  knowledge  of  forfeiture,  without  any  positive  act  of  con- 
firmation, as,  for  example,  delivery  of  policy  or  receipt  of  pre- 
mium, will  in  any  case  avail  to  work  a  waiver  of  a  breach  of 
the  policy  ;  ^  neither  must  it  be  inferred  that  a  breach  of  a 
warranty  contained  in  a  policy  may  be  waived  by  an  agent 
where  the  policy  says  it  cannot,  but  that  a  breach  of  a  war- 
ranty contained  in  the  application  forming  a  part  of  the  pohcy 
cannot  be  waived  by  any  agent,  no  matter  how  broad  his 
authority.^ 

'  Weed  V.  London   &  li.  Fire  Ins.  N.  Y.  315.  ■  Tubbs  v.  Dwelling  House 

Co.  116  N.    Y.    118;   Titus  v.    Glens  Ins    Co.,   84  Mich.   646.     Pollette  v. 

Falls  Ins.  Co.,  81  N.  Y.  419.  U.  S^  Mut.  Ace.  Asso.,  107  N.  C.  240. 

Mns.   Co.  V.  Norton,  96  U.  S.  240.  State  Ins.  Co.  v.  Gray,  44  Kan.  781. 

McGurk  V.  Met.  Life  Ins.  Co. ,  56  Conn.  German  Ins.  Co.  v.  Gray,  43  Kan.  497. 

528.    Steenv.  Niagara  Fire  Ins. Co.,  89  Cont'l  Ins.  Co.  v.  Pearce,  39  Kan.  396. 


CHAPTER  YII. 

GENERAL  PRINCIPLES. 

Waiver  and  Estoppel — Continued. 

§  72.  What  cannot  be  Waived. — Parties  to  a  con. 
tract  of  insurance  made  within  a  State  cannot  avoid  the  pro- 
visions of  a  general  statute  of  that  State,  unless  the  statute 
authorizes  it.^ 

The  State  has  the  right  to  prescribe  the  conditions  on  which 
either  foreign  or  domestic  companies  may  do  business  within 
its  jurisdiction,  and  hence  may  prescribe  conditions  of  the  con- 
tract with  reference  to  certain  particulars,  or  may  establish  a 
standard  form  of  contract.^ 

A  corporation  cannot  in  general  do  an  act  ultra  vires  or 
bej'ond  its  corporate  powers  as  defined  by  its  charter,  and 
every  one  dealing  with  the  corporation  is  presumed  to  be  cog- 
nizant of  the  nature  and  extent  of  such  powers.^ 

Thus  if  a  fire  insurance  company  organized  in  New  York 
should  attempt  to  make  a  contract  of  life  or  ocean-marine 
insurance,  the  contract  would  be  void.* 

But  any  directions  of  the  charter  as  to  the  internal  manage- 
ment of  the  affairs  of  the  corporation  are  not  in  general  bind- 
ing upon  outsiders.'^ 

Nor  are  charter  provisions  binding  upon  third  persons 
which  extend  to  the  directors'  discretionary  powers  to  do  a 
certain  act ;  ^  as,  for  example,  where,  by  the  regulations  of  the 

'  St  Paul  F.  &  M.  Ins.  Co.  v.  Shafer,  '  Jemison  v.  Citizens  Savings  Bank, 

76  Iowa,  283.     Emery  v.  Piscataqua  F.  132  N.  Y.  140  (1890). 

&  M.  Ins.  Co.,  52  Me.  322.     Chamber-  *  Re  Arthur  Average  Assoc,  32  L. 

lain  V.  N.  Fl.  Fire  Ins.  Co.,  55  N.  H.  249.  T.  N.  S.  525. 

'^  Continental  Ins.  Co.   v.    Chamber-  '  In  re  Athenaeum  Life  Assur.  Co., 

lain,  13  2  U.  S.  304.     Doyle  v.  Conti-  27  L.  J.  Ch.  829. 

nental  Ins.  Co.,  94  U.  S.  535.     Reilly  '  Ernest  v    Nicholls,    6   H.   of   L. 

V.  Franklin  Ins.  Co.,  43  Wis.  449.  Caaes,  401 


§  75  "Waiver  and  Estoppel.  79 

company,  insurance  is  to  be  made  only  to  three-fourths  of  the 
value  of  property,  but  the  officers  of  the  company  are  to  decide 
what  is  the  value.' 

And,  in  general,  for  a  deviation  from  the  prescribed  method 
of  doing  a  valid  corporate  act,  the  corporation  will  not  be  dis 
charged  from  liability  to  an  innocent  person,  and  therefore  in 
such  matters  of  informality  or  of  inaccuracy,  directions 
whether  of  the  charter  or  by-laws  may  be  waived.^ 

§  73.  What  can  be  Waived  :  Stock  Companies. — 

Any  forfeiture  or  smy  condition  of  the  policj^  inserted  for  the 
benefit  of  the  insurers,  even  those  stipulations  which  provide 
that  there  shall  be  no  waiver,  or  that  no  waivei*  shall  be  made 
except  in  a  certain  manner  as  by  writing,  or  that  certain 
classes  of  persons  shall  be  deemed  to  have  no  authority  to 
waive,  may  be  waived  by  the  insurers  through  such  representa- 
tives as  in  fact  have  the  requisite  authority.  This  is  put  upon 
the  ground  that  parties  having  power  to  make  a  contract  have 
power  by  mutual  consent  to  abrogate  or  alter  it  to  any  extent 
at  their  pleasure,  unless  restrained  by  statute.^ 

§  74.  New    Subject    cannot    be    Introduced    by/ 
Waiver. — The  doctrine  ol'  waiver  and  estoppel  is  not  to  be 
applied  so  as  to  effect  a  change  in  the  subject-matter  of  the\ 
contract. 

Thus  if  by  the  terms  of  the  policy  a  designated  house  is  the 
subject  of  insurance,  the  insured  will  not  be  permitted  to  show 
by  parol  that  in  consequence  of  the  representations  or  conduct 
of  the  insurers  another  house  ought  to  be  substitutedj— 

§  75.  Rule  in  Massachusetts  and  New  Jersey, — 

Massachusetts  and  New  Jersey  adhere  more  closely  to  the  doc- 
trine of  the  common  law,  and  hold  that  a  waiver  of  a  forfeiture 

'  Jones  V.  Bangor  Mut.  S.  Ins.  So.,  Co.,  116  N.  Y.  106.     Insurance  Co.  v. 

61  L.  T.  N.  S.  727  (1890).  Norton,  96  U.  S.  240.     Messelback  v. 

"  In  re  County  Life  Assur.  Co.,  L.  Norman,  123  N.  Y.  578.     Armstrong 

R.,5Ch.  App.  388.  First  Bapt.  Church  v.  Turquand.  9  Irish  Com.  Law,  33. 

V.  Brooklyn  Fire  Ins.  Co.,    19  N.  Y.  Trustees  of  First  Bapt.  Cli.  v.  Brooklyn 

H05.    Relief  Ins.  Co.  v.  Shaw,  94  U.  S.  Fire  Ins.  Co.,  19  N.  Y.  80").     Conover 

574.  V.  Mutual  Ins.  Co.,  1  Comstock,  390. 

'  Weed  V.  London  &  L.   Fire  Ins.        ■•  Sanders  v.  Cooper,  115  N.  Y.  279.     ^J^C* 


80  Insurance  :    Fire,  Life,  Marine.  §  76 

existing  at  the  inception  of  tiie  contract  cannot  be  established 
by  parol  testimony  of  what  transpired  at  or  before  the  closing 
of  the  contract.^ 

But  in  those  States  also  a  waiver  occurring  after  the  incep- 
tion of  the  contract  may  be  shown  by  parol.^ 

§  76.  What  can  be  Waived  :  Mutual  Companies. 

— By  some  courts,  especially  those  of  Massachusetts,  it  has 
been  held  that  the  officers  and  agents  of  a  mutual  insurance 
company  have  no  authority  to  waive  such  of  its  charter  regu- 
lations or  by-laws  as  relate  to  the  essential  terms  of  the  con- 
tract.^ 

This  distinction  is  put  upon  the  ground  that  policy  holders 
in  a  mutual  company  are  members  of  the  company,  and  that 
the  by-laws  are  binding  upon  all,  and  that  the  officers  and  other 
representatives  of  the  company  are  special  agents  appointed  to 
enforce  the  by-laws  and  mutual  arrangements,  and  not  to  dis- 
regard them  in  favor  of  one  of  the  members  as  against  his 
associates. 

Even  in  Massachusetts  the  limitation  extends  only  to  pro- 
jvisions  that  are  of  the  essence  of  the  contract.  Technical 
irequirements  in  regard  to  the  form  and  the  contents  of  the 
I  proofs  of  loss,  or  limitation  of  time  to  sue,  may  be  waived.^ 
♦  And  the  tendency  among  the  courts  seems  to  be  to  deny 
the  distinction  between  mutual  and  stock  companies  alto- 
gether, in  respect  to  the  power  of  the  officers  and  agents  to 
waive  conditions  and  estop  the  company  from  insisting  upon 
forfeitures ;  for,  as  matter  of  fact,  the  applicant  for  insurance 
rarely  knows  anything  about  the  charter  or  by-laws,  and  could 
hardly  be  expected  to  be  acquainted  with  them  at  the  time  of 
making  his  application.^ 

'  Batchelder  V.  Queen's  Ins.  Co.,  135  v.   Shawmut   Mut.    Fire   Ins.    Co.,   4 

Mass  449.    Dewees  v.  Manhattan  Ins.  Allen,  116  ;    s.  c,  81  Am.   Dec.  689. 

Co..  6  Vroom  (N.  J.),  366.  Belleville  Mnt.  Ins.  Co.  v.  Van  Win- 

'  Oakes  v.   Manufrs.  F.  &  M.    Ins.  kle.  1  Beasley,  333.     Pitney  v.  Glens 

Co.,  135  Mass.  248.     Metropolitan  Life  Falls,  65  K  Y.  21. 

Ins.  Co.  V.  McTague,  49  N.  J.  L.  587.  *  Priest  v.  citizens'  Mut.  Fire  Ins. 

Carson  v.  Jersey  City  Ins.  Co  ,  43  N.  <'o. ,  3  Allen,  602.     Jennings  v.  Met- 

J.  Law,  300  ;  s.  c,  39  Am.  Rep  584.  ropolitan    Life    Ins.    Co.,    148    Mass. 

'McCoy  V.  Metrop.   Life    Ins.  Co.,  61. 

133  Mass.  85.    Brewer  v.  Chelsea  Mut.  "•  Relief  Ins.  Co.  v.  Shaw,  94  tJ.  S. 

Fire  Ins.  Co.,  14  Gray,  203.     Mulrey  574.    Kister  v.  Lebanon  Mut.  Ins.  Co.. 


§TT 


Waiver  and  Estoppel. 


81 


Universally  it  is  held  that  the  acceptance  of  an  assessment 
or  premium  by  the  home  office  is  a-  waiver  by  the  company  of 
all  former  grounds  of  forfeiture  known  by  it.^  , 


% 


§  77.  What  ainoiiiits  to  a  Waiver. — Any  unequivo- 
cal and  positive  act  by  the  insurers,  or  their  duly  authorized 
agent,   recognizing  the  policy  as  valid — as,  for  example,  the  '-^^ 
receipt  of  a  premium  or  assessment,  the  delivery  of  the  policy       ^ - 
or  a  renewal  receipt,  or  the  levying  of  an  assessment — consti-  *" 

tutes  a  waiver  of  all  former  known  grounds  of  forfeiture,  and 
the  company  is  said  to  be  estopped  from  setting  them  up  in 
defense.^ 

But  it  is  very  important  to  notice  that  an  oral  consent  or 
promise  made  to  tlie  insured  at  or  before  the  execution  of  the 
contract,  to  tlie  effect  that  he  may  in  future  violate  the  terms 
of  the  policy,  is  not  binding,  and  cannot  be  shown  by  parol, 
because  the  oral  promise  becomes  merged  in  the  contract.^ 
Thus  an  antecedent  promise  by  an  agent,  that  a  premium  note 
need  not  be  paid  when  ckie,  cannot  be  shown  by  parol/ 

An  oral  consent  by  the  insurers  or  their  duly  authorized 
agent,  given  to  the  insured  after  the  execution  of  the  contract, 
permitting  him  to  deviate  from  the  requirements  of  the  policy, 
will  operate  as  a  waiver  if  the  insured  has  relied  upon  it  in  such 
a  way  that  he  would  sustain  injury  in  case  the  consent  were 
repudiated  by  the  insurers,  and  no  new  consideration  need  be 
shovrn  to  support  the  waiver.     The  consent  of  the  insurers  may 


128  Pa.  St.  553.  Conover  v.  Mutual 
Ins.  Co.,  1  Comstock,  290.  Natl.  Mut. 
Ben.  Asso.  v.  Jones,  84  Ky.  110.  Mil- 
ler V.  Hillsborough  Mut.  Fire  Assur. 
Asso.,  44  N.  J.  Equity,  224  Eilen- 
berger  v.  Protective  Mut.  Fire  Ins. 
Co.,  89  Pa.  St.  464,  Olmstead  v. 
Farmers'  Mut.  Fire  Ins.  Co.,  50  Mich, 
204.  Shay  v.  Natl.  Ben.  Society,  54 
Hun.  109.  Stylow  v.  Wis.  Odd  Pel- 
lows'  Mut.  Life  Ins.  Co..  <i9  Wis.  224. 
'  Eice  V.  New  Eng.  Mut.  Aid  Soc, 
146  .Mass.  248.  Rindge  v.  New  Eng. 
Mut.  Aid  Soc,  146  Mass.  286.  Mc- 
Gurk  V.  Metropolitan  Life  Ins.  Co., 
56  Conn.  528.  Bouton  v.  Am.  Mut. 
Life  Ins.  Co.,  25  Conn,  542.  Phoenix 
6 


Life  Ins.    Co.  v.   Raddin,    120   U.   S. 
183. 

-  Morrison  v.  Universal  Marine  Ins, 
Co.,  L.  R.,  S  Exch.  40.  Weed  v.  Lon- 
don &  L.  Fire  Ins.  Co..  116  N.  Y.  106. 
Bevin  v.  C  onn.  Mut.  Life  Ins.  Co.,  23 
Conn.  244.  Rathbone  v.  City  Fire 
Ins.  Co.,  31  Conn.  194.  Armstrong  v. 
Turquand,  9  Irish  C.  L.  32.  Jones  v. 
Bangor  Mut.  Life  Ins.  Co.,  61  L.  T 
N.  S.  727  (1890). 

^  Walton  V.  Agricultural  Ins.  Co., 
116  N.  Y.  317.  Ins.  Co.  v.  Mowry, 
96  U.  S.  544.  Ins.  Co.  v.  Lyman,  l"i 
Wall.  664. 

■*  Thompson  v.  Knickerbocker  Life 
Ins.  Co.,  104  U.  ti.  252. 


82  Insurance  :   Fire,  Life,  Marine.  §  78 

also  sometimes  be  inferred  from  their  prior  course  of  dealing 
with  the  insured.^ 

§  78.  Knowledge  of  Breach:  when  a  Waiver. — 

If  at  the  time  of  closing  the  contract  the  insurers  have  knowl- 
edge of  the  existence  of  a  cause  of  forfeiture  which  would 
invalidate  the  policy  from  the  time  of  its  inception,  they  are 
held,  by  accepting  the  premium  or  delivering  the  policy,  or  by 
any  other  positive  act  amounting  to  an  acknowledgment  of  its 
validity,  to  waive  the  forfeiture.^  The  reason  for  this  construc- 
tion is  that  it  would  be  imputing  to  them  a  fraudulent  intent  to 
presume  tliat  they  designed  to  mislead  the  insured  into  the 
acceptance  of  a  worthless  piece  of  paper  instead  of  a  contract 
of  insurance.  Massachusetts  and  New  Jersey,  however,  as  has 
been  observed  in  another  connection,  have  adopted  the  rule 
that  parol  evidence  of  such  knowledge  on  the  part  of  the  in- 
surers or  their  representatives  at  the  time  of  effecting  insurance 
is  not  admissible  to  disturb  the  letter  of  the  written  contract." 
But  the  mere  knowledge  by  the  insurers  of  the  existence  of 
the  breach  of  contract  does  not  of  itself  amount  to  a  waiver  or 
an  estoppel.* 

If  it  did,  the  company  could  never  take  advantage  of  a  for- 
feiture,  for  the  moment  it  became  aware  of  it,  it  would  be  de- 
'  barred  from  insisting  upon  it.  Therejuust  exist  in  addition  to 
a  knowledge  of  the  breach  some  positive  act  of  confirmation 
upon  which,  in  connection  with  the  knowledge,  a  waiver  may 
be  predicated,  and  by  force  of  which  the  broken  contract  may 
be  said  to  \m  revived.^ 

§  79.  Silence  is  not  a  Waiver. — Mere  silence  on  the 
part  of  the  company  after  knowledge  of  a  forfeiture  by  the 
insured  will  not  operate  as  a  waiver.^     Such  cases  as  the  Texas 

'  Spceri  v.  Mass.  Mut.  Life  lus.  Co.,  Dewees    v.     Manhattan    Ins.    Co.,   6 

89  Fed.  Rep.  752.    Pechner  v.  Ins.  Co.,  Vroom,  366.     Franklin  Fire  Ins.  Co. 

65  N.  Y.  195.  V.  Martin,  40  N.  J.  L.  568. 

*  Van  Schoick  v.  Niagara  Fire  Ins.  *  Adreveno   v.   Mut.  Reserve  Fund 
Co.,  68  N.  Y.  434.  Life  Asso.,  38  Fed.  Rep.  806. 

*  McCIuskey  v.    Providence   Wash-  "  Weed  v.  London  &  Lan.  Ins.  Co., 
ington  Ins.  Co..  126  Mass.  806.     Bar-  116  N.  Y.  118. 

rett  V.  Union  Mut.  Fire  Ins.  Co.,  7  *  Adreveno  v.  Mut.  Reserve  Fund 
Cush.  175.  Putnam  Tool  Co.  v.  Fiteh-  Life  Asso.,  38  Fed.  R,  806.  Titus  y. 
burg  Mut.  Fire  Ins.  C^o  ,  145  Mass.  2(i8.    Glens  Falls  Ins.  Co.,  81  N.  Y.  at  419. 


§  82  Waiver  and  Estoppel.  83 

case,  imposing  upon  the  company  the  burden   of  affirmative 
action  upon  learning  of  a  breach,  are  clearly  unreasonable.' 

The  company  has  not  contracted  and  is  not  obligated  to^^ 
make  search  for  its  policy  holders  before  they  present   any   *<< 
claim,  to  inform  them  that  the  legal  consequences  will  follow         -^ 
their  default.     A  clear  distinction   must  be  made  between  a  *^ 

positive  act  of  ratification  and  an  omission  to  act.     Silence  in 
such  a  case  cannot  be  converted  into  fraud. 

§  80.  Proofs    of  Loss  :    Technicalities. — Technical 

requirements  as  to  the  form  and  contents  of  the  proofs  of  loss,  x  a 
or  time  of  their  service,  or  time  for  bringing  suit,  will  more       ^  ^  - 
readily  be  held  to  be  waived  than  essential  elements  of  the  con- 
tract which  more  vitally  affect  the  risk.^ 

§  81.  Denial  of  all  Liability. — A  positive  denial  by 
the  insurer  of  all  liability  under  the  policy  relieves  the  insured  of 
the  duty  of  furnishing  proofs  of  loss  or  submitting  to  a  personal 
examination  or  to  an  appraisal  under  the  terms  of  the  policy.' 

If  the  insurer  declares  the  policy  annulled  upon  other 
grounds,  the  insured  need  not  go  to  the  unnecessary  trouble 
and  expense  of  a  further  compliance  with  the  terms  of  the  con- 
tract intended  to  supply  the  insurer  with  evidence  of  the 
nature  and  extent  of  its  liability. 

§  82.  Demanding  Proofs  of  Loss. — If  the  company, 
believing  or  suspecting  the  existence  of  a  sufficient  ground  of-r^ 
forfeiture,  but  desiring  in  good  faith  to  avail  itself  of  its  con-     -^ 
tract  privileges   to   examine  into  the  claims  of  the  insured,         ^^ 
aUows  or  even  requests  the  insured  to  furnish  the  usual  proofs  ^3* 

of  loss,  this  should  not  be  held  to  amount  to  a  waiver  or  to  an  ^ 

estoppel.* 

'Morrison    v.    Ins.    Co.,    69    Tex.  nings   v.  Metropolitan  Life  Ins.  Co., 

363.  148  Mass.  61. 

'  Searle  v.  Dwelling  House  Ins.  Co.,  '■'  Knickerbocker    Life    Ins.    Co.    v. 

,152    Mass.   263   (1890).     Goodwin    v.  Pendleton,  112  U.  S.  696. 

Mass.   Mut.   Life  Ins.   Co.,  73  N.   Y.  ■*  Ronald  v.  Mut.  Reserve  Ins.  Co., 

480.     Cleaver  v.  Traders' Ins.  Co.,  40  23   Abb.  N.   C.   271;  N.    Y.   Supreme 

Fed.  Rep.  711.     Eastern  RR.  Co.  v.  Court,  by  Barrett,  J.    Boyd  v.  Vander- 

Relief  Ins.  Co.,  105  Mass.  570.     Jen-  bilt  Ins.  Co.,  20  Ins.  L.  J.  653  (Tenn,, 

May,  1891). 


84  Insurance  :    Fire,  Life,  Marine.  §  83 

The  language  adopted  by  the  court  in  Titus  v.  Glens  Falls 
Ins.  Co.,  81  N.  Y.  410,  and  a])prove(l  by  other  courts,  and  re- 
cently by  the  same  court,'  is  too  broad.  The  company  ought 
to  be  permitted  to  postpone  the  exercise  of  its  right  of  election 
until  it  has  gained  a  reasonable  acquaintance  with  the  facts. 
Such  an  investigation  is  not  inconsistent  with  an  ultimate 
repudiation  of  the  contract,  and  the  insured  cannot  complain 
that  he  is  misled  meanwhile  into  a  neglect  to  take  out  other 
insurance.  The  argument,  that  the  compan}'^  ought  not  to  put 
the  insured  to  any  further  trouble  if  the  contract  is  to  be  for- 
feited, is  quite  offset  by  the  consideration  that  a  rule  of  con- 
struction ought  not  to  be  applied  to  the  contract  which  may 
result  in  depriving  the  company  of  some  of  its  contract  rights 
in  the  event  that  it  shall  decide  to  confirm  the  contract.  If 
calhng  for  proofs  of  loss  amounted  to  a  waiver  of  forfeiture, 
the  company,  through  fear  of  waiving  its  rights,  might  be 
restricted  to  such  information  concerning  the  character  and 
extent  of  the  loss  as  it  could  acquire  without  an}^  assistance 
from  the  insured.  The  tendency  of  this  would  be  to  induce  a 
reckless  settlement  of  losses,  and  to  encourage  fraud  and  arson 
on  the  part  of  unscrupulous  persons,  and  the  inevitable  result 
would  be  to  force  the  insurers  into  an  illiberal  policy  in  the 
adjustment  of  all  claims  whether  honest  or  dishonest.  Calling 
for  the  production  of  books  of  account  in  verification  of  the 
claim  of  the  assured  is  not  a  waiver  of  a  forfeiture  according 
to  the  California  court.^ 

The  New  York  standard  fire  policy  provides  that  to  require 
the  fulfillment  of  the  provisions  of  the  policy  relating  to  proofs 
of  loss  shall  not  constitute  a  waiver. 

§  83.  Taking  Part  in  Ad.ju.stnient. — Similarly,  if  the 
company  sends  its  adjuster  to  investigate  the  facts  and  to  take 
/part  in  an  effort  to  ascertain  the  extent  and  nature  of  the  loss 
before  determining  the  proper  course  to  pursue,  the  court  ought 
not  to  be  eager  to  infer  a  waiver  of  forfeiture,  although  the 
insured  may  have  been  put  to  some  slight  trouble  or  expense 
in  connection  with  the  investigation.^ 

'  Roby  V.  American  Cent.  Ins.  Co.,         ■  McCorniick  v.  Orient  Ins.  Co.,  86 
ISO  N.  Y.  5]?0  (1890).  Cal.  260  (1800). 

=  Pettengill  v.  Ilincks,  9  Gray,  169. 


§  85  Waiver  and  Estoppel.  85 

The  ultinitate  disposition  of  claims  against  insurance  com- 
panies must  often  be  submitted  to  a  loss  committee  or  other 
high  official  whose  consideration  and  decision  of  the  matter 
ought  to  follow  rather  than  to  precede  the  investigation  made 
by  the  adjuster. 

The  doctrine  of  the  Michigan  case,  and  others  like  it,  is  not 
to  be  approved.^ 

The  New  York  standard  policy  provides  that  such  acts 
shall  not  be  deemed  a  waiver. 

§  84.  Company  may  Defend  on  other  Grounds 
than  those  first  Named. — For  a  company  to  refuse  after 
loss  to  make  payment  upon  some  specified  ground  of  supposed 
but  mistaken  exemption  from  liability  ought  not  to  estop  it 
from  setting  up  other  grounds  of  defense  in  the  action.^ 

The  trouble  and  expense  of  a  law-suit  to  the  unsuccessful 
litigant  constitute  an  insufficient  excuse  for  depriving  the  other 
party  of  contract  rights.  Insurance  companies  are  not  infal- 
lible. Oftentimes  by  the  knavery  of  the  insured  they  are 
ignorant  of  the  most  material  and  important  facts  pertaining 
to  their  defense  until  after  the  conclusion  of  a  painstaking  and 
expensive  investigation.  There  would  seem  to  be  about  as 
much  reason  for  allowing  them  to  make  this  expense  their  sole 
ground  of  defense  as  to  allow  the  insured  to  construct  a  cause 
of  action  out  of  the  expense  of  the  law-suit  in  which  he  estab- 
lishes no  right  of  action. 

The  language  in  the  Michigan  and  other  similar  cases  is 
unreasonable.* 

§  85.  A  Retention  of  Proofs  Waives  Defects  that 
might  have  been  Remedied. — For  the  insurers  to  retain 
the  proofs  of  loss  or  death,  without  pointing  out  any  objection 
to  their  form  or  contents  within  a  reasonable  time,  constitutes 
a  waiver  of  such  mistakes  and  defects  in  the  proofs  as  the 
insured  could  have  remedied  upon  notice.  Here  is  a  clear 
ground  of  estoppel . * 

'  Liverpool,    London    &   Globe    In-  *  Castner  v.  Farmers  Mut.  Ins.  Co., 

surance    Co.    v.    Verdier,    33    Mich.  50  Mich.  273. 

138.  *  Keeney  v.  Home  Ins.  Co.,  71  N.  Y. 

'  Devens  v.  Mech.  &   Traders  Ins.  396.    Jennings  v.  Metropolitan  Life, 

Oo.,  83  N.  Y.  168.  148  Mass.  61  (1888). 


CHAPTER  VIII. 

GENERAL    PRINCIPLES CONTINUED. 

Waiver  and  Estoppel  hy  Agents. 

Insttrance  companies,  being  corporations,  can  act  only  by 
representatives  or  agents.  The  law  of  agency  in  general  is 
applicable  to  insurance,  and  in  its  practical  operation  in  the 
determination  of  many  of  the  questions  that  arise  between  the 
parties  to  an  insurance  contract  or  their  respective  represent- 
atives requires  no  special  notice ;  but  when  it  comes  to  the 
doctrine  of  waiver  and  estoppel,  as  arising  from  the  acts  and 
omissions  of  the  agents  of  the  insurers,  an  attempt  has  been 
made  by  many  courts  to  apply  as  against  insurance  companies 
a  more  than  ordinarily  stringent  rule  of  responsibility. 

If  an  employer  chooses  to  do  an  act  through  the  instru- 
mentality of  another,  it  is  fairly  the  employer's  act — qui  facit 
fer  alixim  facit  per  se  •  and  though  the  act  is  unauthorized,  if, 
upon  learning  of  it,  the  emplo3^er  adopts  it  by  confirmation, 
then' the  act,  together  with  any  benefit  accruing  therefrom,  be- 
comes his  own — omnis  ratihdbitio  retrotraJiitur  et  mandato 
<Bquiparatvr.  Subordinates  ought  to  work  in  subjection  to 
the  commands  of  their  masters,  and  seldom  are  possessed  of 
pecuniary  means  with  which  to  satisfy  the  claims  of  third  per- 
sons who  may  have  been  injured  by  the  conduct  of  the  master's 
business.  The  master,  therefore,  should  be  responsible  for  what 
is  done  within  the  scope  of  the  employment — rrspondeat  supe- 
rior j  and  when  the  thing  which  the  agent  is  employed  to  do 
has  been  accomplished,  the  power  of  the  agent  has  spent  itself 
and  is  terminated,  and  the  principal  is  not  answerable  for  acts 
thereafter  of  him  who  was  once  his  agent — nemo  ex  alterius 
facto  proegravari  debet. 

It  is  proper  in  all  cases,  that,  as  between  the  principal  and 
An  innocent  third   party,  the  former  rather  than   the  latter 


§  86  Waiver  and  Est()Ppp:l  hy   Agents.  87 

should  suffer  for  the  luisconduct  and  misi'epresentations  of  the 
agent,  if  relating  to  the  business  intrusted  to  him,  and  within 
the  scope  of  its  natural  and  reasonable  requirements.  This  is 
for  the  reason  that  it  is  the  principal  who  selects,  controls,  and 
pays  his  agent,  who  enjoys  the  beneiits  of  his  services  when 
faithfully  rendered,  and  who  alone  possesses  the  power  to  dis- 
charge him  if  incompetent  or  unfaithful.  But  these  familiar 
considerations  Avhich  underlie  the  elementary  doctrines  of  the 
law  of  agency  in  all  its  ramifications  are  not  illustrated  with 
any  special  force  in  the  relations  existing  between  an  insurance 
company  and  its  agents.  Sometimes  these  agents  are  brokers 
acting  for  the  one  party  or  the  other  as  opportunity  offers; 
and  usnallv  the  so-called  local  or  canvassiui;:  ao^ents  outside  the 
home  office,  though  in  the  regular  employ  of  the  company,  are 
not  exactly  in  their  pay,  for  they  simply  retain  from  the 
moneys  paid  by  the  insured  a  fixed  commission.  The  interests 
of  the  agent  are  by  no  means  identical  with  those  of  the 
company :  for  it  is  for  the  immediate  profit  of  the  agent  to 
close  the  bargain,  whether  the  proposed  risk  is  a  good  one 
or  not ;  and  in  his  feelings  and  affiliations  it  often  happens 
that  he  is  quite  as  friendly  towards  his  neighbors  and  towns- 
people who  are  his  customers,  as  towards  the  corporation 
whose  central  oflBce  and  whose  officers  he  may  never  have 
seen. 

§  86.  Ostensible  Authority. — If  the  company   holds 
out  its  agent  to  the  public  as  authorized  to  do  a  particular  act,j 
or  to  transact  a  particular  kind  of  business,  this  carries  with 
it  an  authority  to  adopt  the  ordinary  means,  and  do  and  say| 
the  appropriate  things,  to  accomplish  the  object  for  which  the  \ 
agent  is  employed.*  ' 

To  determine  the  extent  of  the  authority,  then,  regard 
must  be  had  not  only  to  the  actual  instructions  given  by  the 
principal,  which  are  seldom  disclosed  to  the  insured,  but  also 
to  the  character  of  the  particular  business  involved — whether, 
for  example,  it  be  simply  that  of  investigating  losses,  and 
reporting  to  the  principal ;  or  whether  it  be  that  of  soliciting 
for  insurance,  superintending  the  execution  of  the  application 

■  Insurance  Co.  v   Wilkinson,  13  Wall.  222.     Abraham  v.  Ins.  Co.,  40 
Fed.  Rep.  717. 


88  Insurance  :    Fikk,  Lifk,  Marine.  §  87 

and  forwarding  it  to  the  home  olKce  ;  or  whether  it  involve  th(^ 
ampler  powers  and  wilder  discretions  of  making  and  modifying 
contracts.^ 

§  87.  Undisclosed  Instructions  not  binding  upon 

the  Insured. — If  the  natural  and  ordinary  demands  of  the 
business  actually  intrusted  to  the  agent  invest  him  with  the 
power  to  adopt  a  certain  course  of  action  or  representation, 
the  principal  is  bound  thereby,  and  may  not  be  permitted  to 
show  that  his  undisclosed  instructions  of  a  different  tenor  and 
effect  have  been  violated  by  the  agent. 

Hence,  it  often  happens  that  an  agent  has  power  to 
bind  his  principal  in  flat  disobedience  of  his  express  instruc- 
tions.^ 

For  the  agent's  wrongful  or  fraudulent  acts  of  commission 
or  omission,  and  for  his  material  misrepresentations  or  trickery 
within  the  scope  of  his  ostensible  authority  as  thus  defined,  the 
company  is  liable.  Thus,  where  the  soliciting  agent  of  a  life 
company,  in  filling  up  the  application,  fraudulently  misstated 
the  age  of  the  assured,  and  filled  out  a  physician's  certificate, 
and  forged  the  name  of  the  examining  physician  thereto,  and 
while  the  policy  was  in  his  hands  for  delivery  changed  the  age 
of  the  assured  as  stated  therein,  so  as  to  show  his  real  age,  and 
then  delivered  it,  and  neither  the  assured  nor  the  company 
knew  anything  of  these  fraudulent  acts,  it  was  held,  that  the 
company  was  liable.^ 

§  88.  Agency  to  be  Determined  by  the  Facts  of 
Each  Case. — Who  are  agents  of  the  company,  and  whether 
brokers  and  agents  are  the  representatives  of  the  insured  or 
the  insurers,  are  questions  of  fact  to  be  determined  by  the 
circumstances  of  each  case.*  But,  if  the  facts  are  undis- 
puted, the  relationship  of  agency  is  usually  a  question  of 
law.' 

1  Ins.    Co.   V,    Edwards,    122   U.  S.  *  Commercial   Ins.    Co.    v.    Ives,  56 

457.     Eastern  R.R.  Co.  v.  Relief  Ins.  111.  402.      Kansal  v.    Minn.  Farmers 

Co.,  105  Mass.  570.  Mut.  Fire  Ins.  Co.,  31  Minn.  17.     In- 

'  Ruggles  V.  Am.  Central  Ins.  Co.,  surance  Co.    v.    Wilkinson,  13    Wall. 

114  N.  Y.  415(1889).  222. 

■•  Mc Arthur  v.   Home  Life  Ass.,  73  "  Allen   v.    German   Am.  Ins.   Co., 

(owa,  336  (1887).  123  N.  Y.  6. 


§  89  Waiver  and  Estoppel  by  Agents.  89 

§  89.  Effect  of  Stipulations  in  the  Contract  itself 
as  to  who  are,  or  are  not,  Agents  of  the  Company.— 

Policies  of  lire  insurance  frequently  contain  either  one  of  these 
two  stipulations  :  (1)  That  any  person,  other  than  the  assured, 
who  may  have  procured  the  insurance  to  be  taken  shall  be 
deemed  to  be  the  agent  of  the  assured,  and  not  of  the  company, 
in  any  transaction  relating  to  the  insurance;  (2)  that  in  any 
matter  relating  to  the  insurance  no  person,  unless  duly  author- 
ized in  Avriting,  shall  be  deemed  the  agent  of  the  company. 

And  life  policies  often  contain  a  provision,  in  substance, 
that  agents  are  not  authorized  to  make,  alter,  or  discharge 
contracts,  or  to  waive  forfeitures,  or  to  grant  permits,  or  to 
receive  for  premiums  anything  but  cash. 

The  effect  of  such  contract  provisions  has  been  the  subject 
of  so  much  controversy,  and  the  occasion  of  so  many  inhar- 
monious utterances  from  the  bench,  that  it  behooves  any  one  to 
approach  with  diffidence  the  necessary  attempt  to  evolve  from 
them  the  law. 

These  stipulations  are  not  illegal  or  against  public  policy, 
and  are  held  to  be  of  some  binding  force  upon  the  insured,  and 
at  least  prima  facie  true.  Consequently,  if  true,  they  are 
absolutely  binding.^  They  have  the  practical  advantage  of 
restricting  what  otherwise  might  be  a  broader  ostensible  power 
in  the  agent ;  but  by  the  weight  of  authority  they  are  not  con- 
clusively binding,  unless  true,  because  the  relation  of  agency 
is  one  existing  between  the  company  and  its  agent,  and  ought 
to  be  primarily  determined  by  what  has  passed  between  them 
extrinsic  to  the  polic}',  inasmuch  as  the  policy  is,  in  respect  to 
that  relation,  res  inter  alios  acta. 

A  sweeping  general  clause  of  this  character,  in  a  printed 
form  of  policy,  does  not  very  closely  resemble  an  agreement 
between  two  persons,  intelligently  and  deliberately  made,  to 
the  effect  that  a  certain  designated  third  person,  of  whom  they 
know  and  who  is  before  their  thoughts,  shall  or  shall  not  be 
reofarded  as  the  agent  of  one  or  the  other  of  them  in  what  such 
third  person  is  about  to  do  or  has  done.  Moreover,  the  terms 
of  the  policy  are  oftentimes  settled  by  the  agent  himself  with- 
out conference  with  the  home  office ;  and  if  the  policy  is  as- 

»  Merserau  v.  Phenix  Mut.  Life  Ins.    Am.  Ins.  Co.,  123  N.  Y.  6.     Whited  y. 
Co.,  66  N.  Y.  274.     Allen  v.  German    Germania  Fire  Ins.  Co.,  76  N.  Y.  416. 


do  Insurance  :    Fire,  Life,  Marine.  §  89 

serted  to  be  in  any  respect  the  source  of  the  agent's  authority, 
the  answer  would  seem  pertinent,  that  an  agent  cannot  fix  the 
Hmits  of  his  own  authority.  And,  again,  if  the  agent  is  in 
fact  the  representative  of  the  company,  and  has  an  authority 
sufficiently  broad,  he  can  waive  the  clause  denying  his  author- 
ity as  well  as  any  other  clause.  If  such  a  clause  is  untrue  or 
insincere,  there  is  certainly  no  special  sanctity  attaching  to 
it ;  on  the  contrary,  this  class  of  provisions  in  the  policy  has 
stirred  the  antagonism  of  the  courts  more  than  any  other  of 
its  conditions.  And,  finally,  the  significant  fact  cannot  alto- 
gether be  ignored,  that  the  policy,  as  a  rule,  is  not  executed 
and  delivered  to  the  insured  until  after  the  application  has 
been  given  to  the  company,  and  often,  in  fire  and  marine 
insurance,  not  until  after  the  contract  of  insurance  has  been 
closed  and  the  premium  paid. 

A  stipulation  of  this  character,  it  may  be  contended,  is  (1) 
a  recital  of  fact,  or  (2)  an  agreement  to  be  complied  with, 
or  (3)  a  mutual  promise  between  the  insured  and  the  insurers, 
that  the  policy  shall  be  the  sole  evidence  of  the  alleged  fact  of 
non-agency.  To  the  third  suggestion  it  is  a  sufficient  answer  to 
say  that  the  clauses  of  the  policies  do  not  so  prescribe,  and  the 
courts,  moreover,  do  not  look  with  much  favor  upon  attempts 
by  the  parties  to  abrogate  by  agreement  the  established  rules 
of  evidence.' 

If  it  is  regarded  as  a  recital  of  fact,  such  recital  is  not 
conclusively  binding  upon  the  insured  because  no  sufficient 
ground  of  estoppel  is  shown  in  favor  of  the  insurers.^  The 
rule  in  regard  to  the  conclusive  effect  of  recitals  even  in  deeds 
is  restricted  to  the  recital  of  those  particulars  which  are  sup- 
posed to  have  received  the  deliberate  attention  of  the  parties.* 

This  is  not  analogous  to  the  case  where  a  party  takes  a 
corporate  deed  executed  by  an  agent  therein  recited  to  have 
due  authority,  in  which  case  the  grantee  is  not  permitted  to 
deny  the  authority  of  the  agent,  because  a  good  ground  of 
estoppel  is  presented.* 

'  Travellers  Ins.   Co.  v.  McConkey,        '  1  Q-reenleaf  on  Evidence,  §  26. 
127  U.  S.  667.     Utter  V.  Ins.  Co.,  65        *  Stowv.  Wyse,  7  Conn.  214.    Hunt 
Mich.  545.  ington  v.  Havens,  5  Johns.  Ch.  23. 

'  1  Greenleaf  on  Evidence,  §   285. 
S  Washburn  on  Real  Estate,  p.  109. 


§  89  Waiver  and  Estoppel  by  Agents.  91 

If  the  clause  is  regarded  as  a  stipulation,  neither  party 
ought  to  violate  it;  and  if  the  compan}^  permits  those  who  are 
actually  its  agents,  though  without  a  written  commission,  to 
solicit  insurance  for  its  benefit,  and  to  superintend  the  execu- 
tion of  applications,  and  to  make  representations  in  its  behalf, 
the  insured  should  be  permitted  to  show  these  facts  by  parol, 
as  amounting  to  a  breach  of  the  stipulation  on  the  part  of  the 
insurers,  if  the  stipulation  is  held  to  have  force. 

Such  a  stipulation  is  not  conclusively  binding  after  the 
inception  of  the  contract,  for  the  reason  that  the  company,  in 
spite  of  the  contract,  migiit,  as  a  matter  of  fact,  after  delivery 
of  the  policy,  change  the  scope  of  the  authority  of  the  persons 
employed  by  it  or  alter  the  manner  of  bestowing  authority 
upon  them  ;^  and,  according  to  the  weight  of  authority,  such  a 
clause  is  not  conclusively  binding  upon  the  insured  in  respect 
to  the  negotiations  prior  to  the  inception  of  the  contract, 
because  it  is  to  be  regarded  in  its  essential  nature  as  a  notice 
to  the  insured  of  an  alleged  fact  extrinsic  to  the  policy 
which  should  take  effect  from  its  receipt,  and  provided  it  is 
true,  rather  than  as  a  proper  provision  of  the  agreement,  or 
one  which  the  insured  could  fairly  anticipate  would  be  incor- 
porated in  the  policy.^ 

The  sound  rule  would  seem  to  be  that  laid  down  by  the 
United  States  Supreme  Court  in  a  case  which  has  often  been 
cited,  I  think  erroneously,  as  supporting  the  proposition  that 
the  contract  limitation  upon  the  agent's  powers  is  conclusive 
until  after  the  inception  of  the  contract.  The  opinion  of  Mr. 
Justice  Bradley  in  that  case  would  seem  rather  to  mean  that 
the  companies  may  obtain  the  advantage  of  the  agency  clauses 
which  they  have  inserted  in  the  general  forms  of  their  policies 
only  by  acting  in  accordance  with  them  ;  and  that  such  clauses 
are  tantamount  to  a  notice,  which  is  not  binding  unless  true,  and 
which  may  be  waived  or  disregarded   by  the   companies  at 

>  Wilber  v.  Williamsburgh  City  Fire  Mar.   Ins.  Co. ,  43  Wis.  108.      North 

Ins.  Co.,  122  N.  Y.  443.     Ins.  Co.  v.  Brit.  &   Mer.  Ins.  Co.  v.   Crutcnfield, 

Norton.  96  U.  S.  234.  108  Ind.  518.     Sullivan  v.  Phenix  Ins. 

"  Kister  v.  Lebanon  Mut.  Ins.  Co.,  Co.,  34  Kans.  170.  Planters  Ins.  Co. 
128  Pa.  State,  553.  Commercial  Ins.  v.  Myers,  55  Miss.  479.  Boetcher  v. 
Vo.  V.  Ives,  56  lU.  402.  Kausal  v.  Hawkeye  Ins.  Co.,  47  Iowa,  258.  Par- 
Minn.  Farmers  Mut.  Fire  Ins.  Co.,  31  tridgev  Commercial  Ins.  Co.,  17  Hun. 
Minn.  17.     Gans  v.  St.    Paul  Fire  &  95. 


92  Insurance:    Fire,  Life,  Marine.  §  90 

pleasure.^  Following  a  similar  view  the  New  York  Court  of 
Appeals  has  unanimously  held  in  a  recent  case  that  an  ag(3nt  of 
an  insurance  company  may  be  shown  to  have  an  actual  author- 
ity to  waive  a  forfeiture  for  non-payment  of  premiums,  although 
the  policv  itself  declare  that  he  has  no  such  authority.^  The 
same  principle  has  lately  been  held  by  several  courts  to  be 
applicable  to  proceedings  antecedent  to  the  closing  of  the  con- 
tract, although  the  application  shown  to  the  insured  contained 
a  notice  of  a  pretended  limitation  upon  the  powers  of  the  agent 
to  waive  conditions  or  alter  the  written  contract.^ 

So,  also,  if  the  agent  has  in  fact  an  authority  broad  enough, 
he  may  by  his  acts,  if  done  within  the  scope  of  his  actual  em- 
ployment, estop  the  company  from  claiming  that  an  alleged 
violation  of  the  letter  of  the  contract  really  brought  about  by 
the  agent  himself  shall  constitute  a  defense.* 

Certain  States,  by  statute,  have  adopted  the  rule  that  the 
solicitins:  agfent  shall  be  deemed  the  agent  of  the  insurers,  no 
matter  what  the  polic}^  provides.  Such  statutes  are  constitu- 
tional and  control  the  contract,  but  have  the  disadvantage  of 
all  unreasonably  meddlesome  legislation.^ 

§  90.  Effect  of  Stipulations  as  to  the  Manner  of 
Exercising  Authority.— Where  the  policy  by  its  terms 
permits  a  waiver  of  its  conditions,  it  generally  provides  that 
such  waiver  shall  be  made  only  by  written  agreement,  in- 
dorsed upon  the  policy. 

The  New  York  standard  fire  policy  also  stipulates  that  no 
representative  of  the  insurers  shall  he  deemed  to  have  authority 
to  waive  in  any  other  manner,  except  by  written  agreement, 
indorsed  upon  the  policy  or  attached  to  it. 

To  provide  that  a  waiver  must  be  evidenced  by  writing  is 
eminently  reasonable  and  business-like,  and  full  force  and 
effect  ought  to  be  given  to  this  clause.* 

'  Norton  v.Jns.  Co.,  96  U.  S.  234^  '  Continental  Life  Ins.  Co.  v.  Chara- 

~»^Wyman  V.  Phoenix  Mut.  Ins.  Co".'  berlain,    132    U.    S.  304.     McConnell 

119  N.  Y.  274  (18!)0)  v.    Iowa    Mut.    Aid    Asso.,  79    Iowa 

•  Tubbs  y.  Dwelling  House  Ins.  Co.,  757. 

84  Mich.  646  (1891).     State  Ins.  Co.  v.  »  Hill   v.    London   Assur.    Soc,    26 

Gray,  44  Kans.  li\  (1890).  Abb.  N.  C.  203  (1890);  s,  c,  16  Daly 

♦  Messelbach  v.  Norman,  122  N.  Y.  120. 
578  (1890). 


§  90  "Waiver  and  Estoppel  by  Agents.  93 

But  whether  this  prescribed  method  of  effecting  waivers  is 
exclusive,  or  whether  it  may  itself  be  waived  or  disregarded  by 
any  representative  of  the  company  empowered  with  actual 
authority  to  control  the  contract  in  his  discretion,  is  a  mooted 
question. 

The  Massachusetts  court,  in  a  late  case,  seems  to  decide 
that  it  is  exclusive.  It  uses  the  following  language  :  "  The 
defendant  requested  the  court  to  instruct  the  jury,  in  sub- 
stance, that  a  local  agent,  with  authority  to  receive  premiums 
and  issue  policies,  had  no  authority  as  such  to  waive  the  terras 
and  conditions  of  the  policy,  or  to  waive  the  conditions  in  the 
policy  which  required  the  written  or  printed  assent  of  the  com- 
pany to  any  change  in  the  situation  or  circumstances  affecting 
the  risk.  To  these  instructions  the  defendant  was  entitled. 
They  correctly  state  the  law,  and  were  called  for  by  the  evi- 
dence. An  agent  to  receive  premiums  and  issue  policies  is  not, 
independently  of  evidence  showing  that  he  has  a  much  larger 
authority  than  this,  empowered  to  waive  conditions  so  import- 
ant that  parties  have  seen  tit  to  incorporate  them  into  their  con- 
tract. Some  additional  evidence  must  be  offered  to  show  that 
he  had  been  held  out  by  the  company  as  possessing  such 
authority,  or  that  the  company  had  so  I'atified  similar  acts,  or 
had  so  conducted  itself  in  regard  to  his  other  transactions  that 
the  insured  was  justified  in  believing  that  he  had  such  author- 
ity. Nor  even  if  the  agent  had  the  fullest  authority  could  the 
conditions  of  the  policy  be  waived,  except  in  the  manner  in 
which  they  provide  for  such  waiver.  A  company  which  has 
seen  fit  to  prescribe  that  the  terms  and  conditions  of  its  policy 
shall  only  be  waived  by  its  written  or  printed  assent,  has  pre- 
scribed only  a  reasonable  rule  to  guard  against  the  uncertain- 
ties of  oral  evidence,  and  by  this  the  insured  has  assented  to  be 
bound."  ^ 

Such  reasoning  as  this  is  very  cogent,  but  it  aims  a  blow  at 
the  doctrine  of  waiver  generall}^  as  it  has  been  applied  by 
all  the  courts  to  the  contract  of  insurance. 

In  a  later  case,  on  the  other  hand,  the  New  York  Court  of 
Appeals  undoubtedly  voices  the  prevailing  opinion  when  it 
■says  :  ''  Notwithstanding  the  provisions  of  the  policy  that  any- 
thing less  than  a  distinct  sjjecific  agreement,  clearly  expressed 
»  Kyte  V.  Commercial  Union  Assur.  Co.,  144  Mass.  46  (1887),  Devens,  J. 


94  Insurance:    Fire,   Life,  Marine.  §91 

and  indorsed  on  the  policy,  should  not  bo  considered  as  a 
waiver  of  any  printed  or  written  condition  or  restriction 
therein,  the  court  recognize  and  affirm  the  law  as  settled  in 
this  State  that  such  condition  can  be  dispensed  with  by  the 
company  or  its  general  agents  by  oral  consent  as  well  as  by 
writing."  ^ 

Inasmuch  as  the  admitted  purpose  of  a  waiver  or  an  estoppel 
is  to  subvert  the  terms  of  the  contract,  the  New  York  rule 
seems  to  be  more  in  harmony  with  the  principles  which  under- 
lie the  doctrine  of  waivers  generally  ;  but  it  by  no  means  fol- 
lows that  this  doctrine  is  altogether  independent  of  the  stipula- 
tions of  the  parties.  It  is  an  anomalous  and  exceptional  rule 
of  law,  established  only  to  prevent  injustice  or  fraud,  but  is  to 
be  qualified  by  express  agreement  when  fairly  and  intelligently 
made. 

§  91,  Authority   of  Officers   of  the   Company. — 

Unless  restricted  by  charter  or  official  action  of  the  directors, 
officers  have,  in  general,  authority  to  make  and  alter  contracts, 
to  waive  conditions  and  forfeitures,  to  give  permits,  to  cancel 
policies,  to  adjust  losses  and  compromise  claims  in  their  dis- 
cretion. 

Where  a  policy  of  insurance  or  other  instrument  emanating 
from  them  alone,  or  from  their  subordinates,  states  that  neither 
they  nor  any  other  representative  of  the  coi"poration  have  any 
such  power,  it  simply  amounts  to  the  contradiction  of  a  rule  of 
law. 

Some  companies  define  this  matter  by  official  action,  of 
which  they  ordinarily  give  notice  to  those  who  deal  with  them.' 
The  Equitable  Life  Insurance  Company,  for  example,  gives 
notice  that  certain  of  its  officers,  naming  them,  are  the  sole 
representatives  of  the  company  authorized  to  make,  alter,  and 
discharge  contracts,  and  waive  forfeitures.  In  that  company 
one  of  the  designated  officers,  if  he  had  actual  authority, 
could  unquestionably  waive  any  clause  of  the  policy,  although 

»  Weed  V.  London  &  Lancashire  Fire  625.     Pechner  v.  PhcBnix  Ins.  Co.,  65 

Ins.  Co.,    116  N.   Y.   117  (1889),  per  N.  Y.  195. 

l^rown.  J.     Steen  v.  Niagara  Fire  Ins.         ^  Ryan  v.  World  Mut.  Life  Ins.  Co., 

Co.,  89   N    Y.    315.     Marcus  v.    St.  41  Conn.  168. 
Louis  Mut.   Life  Ins.   Co.,  68  N.  Y. 


§  93  Waiver  and  Estoppkl  by  Agents.  95 

the  policy  should  provide,  as  does  the  New  York  standard  fire 
policy,  that  no  representative  of  the  compan}^  had  such  power ; 
and  he  could,  witliin  the  prevailing  rule  of  law,  make  an  effect- 
ual oral  waiver,  although  the  policy  provided  that  no  waivers 
should  be  valid  unless  in  writing.* 

§  93.  Authority  of  Managers. — General  managers  of  ; 
foreign  insurance  companies  and  of   domestic  fire  or  marine  ' 
companies,  with  regard  to  the  doctrine  of  waiver  and  estoppel, 
in  the  absence  of  express  restrictions  upon  their  authorityjnade 
known  to  the  insured,  stand  very  much  in  the  place  of  officers.* 

§  93.  Authority  of  Canvassing  Agents :  Life. — Can- 
vassing agents  of  life  insurance  companies,  whether  the  so  called  > 
general  agents  or  sub-agents,  have  as  a  rule,  as  explained  in  j 
Chapter  I.,  no  express  authority  to  make,  alter,  or  discharge  ■ 
contracts,  or  to  waive  forfeitures,  or  to  grant  permits.     In  this 
regard  they  are  essentially  special  agents,  whether  the  policy 
calls  them  so  or  not ;  and  there  is  no  reason— though  some  of 
the  courts  do  not  agree  to  this — why  in  the  ordinary  course  of 
business  they  should  be  assumed  by  those  dealing  with  them  to 
have  any  such  authority,  except  as  described  and  explained  in 
the  following  instances. 

1.  Exception  as  to  first  premium. 

An  agent  of  a  life  company  who  is  intrusted  with  the 
business  of  closing  the  contract  by  delivering  the  policy  is  held 
to  have  an  implied  authority  to  determine  how  the  premium 
then  due  shall  be  paid,  whether  by  cash  or,  as  is  sometimes 
done,  by  giving  credit,  in  which  case  the  agent  becomes  the 
creditor  of  the  insured,  and  debtor  to  the  insurer.  In  that 
event,  though  the  agent  subsequently  defaulted  and  the  money 
never  reached  the  company,  the  policy  would  still  be  binding.* 
By  the  weight  of  authority  the  agent  is  held  to  have  this  dis- 
cretionary power,  although  the  policy  in  terms  denies  it ;  but 

'  Dilleber  v.  Knickerbocker  Life  Ins.  '^  Eastern  R.R.  Co.  v.  Relief  Ins.  Co., 

Co.,  76  N.  Y.  567.    Baldwin  v.  Citizens  105  Mass.  570.     McGurk  v.  Metropoli- 

Ins.  Co..  60  Hun,  389  (1891).    Steen  v.  tan  I>ife,  56  Conn.  528.     Ins.  Co.  t. 

Niagara  Fire  Ins.  Co.,  89  N.  Y.  315.  Mahone,  21  Wall.  152. 

Church  V.  Lafayette  Fire  Ins.  Co.,  66  '  Miller  v.  Life  Co.,  12  Wall.  286, 
N.  Y.  222. 


9Q  Insurance  :    Fire,  Life,  Marine.  §  93 

this  is  based  upon  his  possession  of  the  document  for  purposes 
of  dehvery,  and  his  instructions  to  dehver  it,  and  consequently 
his  power  does  not  extend  to  subsequent  premiums  or  premium 
notes.  ^ 

It  might,  however,  be  necessary  for  the  insured  to  give 
some  evidence  that  such  a  custom  was  known  and  permitted 
by  the  company,  if  the  pohcy  expressly  denied  the  agent  this 
power,  for  it  has  been  held  that  the  soliciting  agent  has  no 
authority  simply  by  virtue  of  his  position  to  accept  anything 
but  cash  ;  ^  and  of  course  he  would  have  no  implied  author- 
ity to  take  in  payment  personal  property,  as,  for  instance,  a 
horse.^ 

2.  Where  the  application  for  insurance  is  filled  in  by  the 
soliciting  agent  of  the  insurer,  and  true  answers  of  the  insured, 
given  orally,  to  the  interrogatories  contained  therein  are  errone- 
ously or  improperly  written  by  the  agent  at  his  own  suggestion, 
without  carelessness  or  fraud  or  collusion  on  the  part  of  the 
assured,  the  insurer  is  responsible  for  the  mistake,  and  is  es- 
topped from  seeking  to  convert  its  own  act  into  a  ground  of 
defense  against  the  insured  for  an  alleged  breach  of  contract. 
In  such  a  case  the  courts  are  disposed  to  hold  the  company,  no 
matter  what  the  policy  or  the  application  may  provide  to  the 
contrary,  on  the  ground  that  the  act  is  purely  the  act  of  the 
company,  and  that  an  estoppel  derives  its  sanction  from  a  rule 
of  hiw  and  not  at  all  from  the  contract  itself,  which  indeed  its 
ostensible  object  is  to  subvert.^ 

If,  however,  the  erroneous  statements  in  the  application  are 
the  result  of  fraud  on  the  part  of  the  insured,  or  collusion  with 
the  agent,  the  equities  of  the  insured  are  no  better  than  those 
of  the  company,  and  the  company  is  not  estopped  from  insist- 
ing upon  the  letter  of  the  written  contract.     Thus  where  the 

'  Critchett  v.  Am.  Ins.  Co.,  53  Iowa,         *  Messelback  v.  Norman,  122  N.  Y. 

404:  s.c,  36  Am.  Rep.  230.     Walsh  v.  578.     Tubbs  v.  Dwelling  House  Ins. 

Hartford  Ins.  Co.,  73  N.  Y.  5.     Life  Co.,  84  Mich.  646.     Continental  Ins. 

Ass.  Co.  V.  Ward,  17  C.  B.  645.    Roeh-  Co.  v.  Pearce,  39  Kans.  396.     O'Brien 

ner  v.  Knick   Life  Ins.  Co.,  63  N,  Y.  v.   Home  Benefit  Society,   117  N.  Y. 

160.  310.     Miller  v.   Phoenix  Mutual  Life 

«  Raub  V    N,  Y.  Ins.  Co.,  14  N.  Y.  Ins.   Co.,  107  N.  Y.  •  93.     Ins.  Co.  v. 

State  l^cp.  573.  Wilkinson,  13  Wall  23-'.    Continental 

■  HolTinaii  v.   John    Hancock  Mut.  Ins.   Co.   v.  Chamberlain,    133  U.  S. 

Co.,  9'?  [].  S  161.  804. 


§  93  Waiver  and  Estoppel  by  Agents.  97 

insured  told  the  agent  that  he  could  write  the  answer  as  he 
liked.^ 

The  Maryland  case,^  like  others  of  a  similar  kind,  is  not  to 
be  commended  ;  for  the  insured  in  the  Maryland  case  knew  that 
the  company  was  to  be  misinformed  as  to  his  age,  and,  although 
he  was  an  ignorant  man,  the  company  ought  not  to  have  been 
held  responsible  for  his  moral  degradation,  whether  the  act 
of  writing  the  erroneous  answer  was  the  act  of  the  accent  or 
not. 

If  the  mistake  in  the  application  constituting  the  alleged 
breach  of  warranty  occurs  because  of  the  omission  of  the 
insured  to  read  the  application,  and  he  is  not  reasonably 
deterred  from  reading  it  by  affirmative  representations  of  the 
agent,  or  by  inability  through  blindness  or  ignorance,  the  in- 
sured ought  unquestionably  to  be  held  responsible  for  the  writ- 
ten statements  which  he  has  signed  as  the  basis  of  the  con- 
tract ;  and  clearly  an  omission  to  read  the  application  is pru)ia 
facie  carelessness  ^  on  his  part. 

On  this  last  point,  however,  the  courts  have  divided,  and  in 
many  cases  it  has  been  held  that  the  company  is  bound  by  the 
act  of  its  agent  in  writing  the  mistake  into  the  application, 
although  the  error  is  perfected  through  the  carelessness  of  the 
insured  in  neglecting  to  read  what  he  signs. 

3.  If  the  statements  of  the  application  are  what  the  insured 
intended  them  to  be,  and  the  mistake  arose  through  ignorance 
of  the  meaning  of  the  terms  employed,  which  were  used  at  the 
suggestion  of  the  agent,  the  insured  ought  to  be  held  to  the 
written  contract,  and  the  policy  avoided,  if  the  agent  is  only  an 
ordinary  canvassing  agent,  although  such  agent  be  styled  a 
general  agent  with  power  to  select  sub-agents;  for,  as  we  jjave 
seen,  soliciting  agents  of  life  companies  are  in  law  nothing  but 
special  agents,  without  authority  to  alter  policies  by  their  rep- 
resentations or  promises.  They  have  no  right  to  interpret  the 
terms  of  the  application  or  the  policy.  The  law  determines 
what  the  written  language  means,  and  an  agent  who  has  no 

'  Blooming  Grove  Mut.  Ins.  Co.  v.  ^  Keystone  Mut.  Ben.  Asso.  v.  Jones 

McAnerney,   102    Pa.    St.    335;   s  c,  72  Md.  363  {1S90). 

48   Am.    Rep.    209.      Lewis  v.    Phoe-  '  N.  Y.  Life  Ins.  Co.  v.  Fletcher,  11? 

nix  Mut.    Life    Ins.,    Co.,   39    Conn.  U.  S.  519.     Ryan  v.  World  Life  Ins. 

100.  Co.,  41  Conn.  168. 
7 


98  Insurance  :    Firk,   Life,  Marine.  §  93 

authority  to  make  a  contract  has  no  authority  to  unmake  one 
by  expressing  his  opinion  of  its  meaning.' 

It  must  be  conceded,  however,  tliat  in  many  cases  the 
contrary  view  has  been  accepted  by  the  courts;  namely,  that 
by  allowing  any  representative,  though  only  a  special  agent,  to 
take  an  application  for  insurance,  the  company  impliedly  gives 
an  authority  to  him  to  interpret  the  meaning  and  effect  of  the 
interrogatories  contained  in  the  paper,  and  also  of  such 
answers  as  may  be  made  to  them  by  the  applicant :  and  this 
view  has  in  certain  instances  seemed  to  receive  the  sanction  of 
judges  of  the  highest  eminence.  See,  for  example,  the  language 
of  Chief-Justice  Kuger  in  the  New  York  case,  and  of  Justice 
Hunt  in  the  Federal  case."^ 

Whatever  may  be  the  sound  rule  on  this  point,  the  com- 
panies, in  consequence  of  divers  decisions  against  them,  are 
apt  to  give  an  express  notice  to  the  insured,  in  the  applica- 
tion or  premium  receipt,  of  a  restriction  upon  the  agent's 
authority  to  interpret  or  otherwise  change  the  terms  of 
the  contract;  and  by  such  notice  of  restriction,  if  true,  the 
insured  will  be  bound.  Thus  where  in  answer  to  the  question 
contained  in  the  application,  "  Are  you  now  insured  in  any 
other  company?"  the  applicant  truthfully  stated  to  the  agent 
that  he  had  certain  other  insurance,  but  the  agent  wrote  "  No,"" 
it  was  held  that  the  company  was  not  liable ;  for  on  the  back 
of  the  policy  was  a  notice  that  no  agent  had  the  power  to  bind 
the  company  b}'  receiving  any  representations  or  information 
not  contained  in  the  application.  And  this  case  has  lately 
been  affirmed  on  appeal  by  the  New  York  Court  of  Appeals.* 
These  cases  are  on  the  border  line,  and  other  courts  upon  sim- 
ilar facts  are  disposed  to  consider  the  doctrine  of  waiver  as 
dominating  the  contract  restrictions.^  Similarly  if  the  assured 
knows  or  has  agreed  that  the  agent  is  a  special  agent,  without 

'  Allen  V.   German    Am.   Ins.  Co.,  Fund  Life  Asso.,  54  Hun,   294.     Ka- 

12B   N.   Y.   (>.      Devens   v.    Mech.   &  bok  v.  Phcenix  Mut.  Life  Ins.  Co.,  4 

Traders  Ins.  Co.,  83  N.  Y.  168.  N.  Y.  Suppl.  718. 

'  Miller  v.   Phoenix    Mut.  Life  Ins.  *  Tubbs  v.  Dwellino:  House  Ins.  Co., 

Co.,  107  N.  Y.  -.'96.     N.  J.  Mut.  Life  84    Mich.    (i46     (1891).       Bushaw    v, 

Ins.  Co.  V.  Baker,  94  U.  S.  010.  W^omen's   Mut.    Co.,  8  N.  Y.  Suppl. 

*  McCoUum  V.  Mut.  Life  Ins.  Co.,  423.     Baumgartel  v.  Prov.  Wash.  Ins 

65  Hun.   103  ;   s.   c,  l'>4   N.   Y.    642  Co.,  61  Hun.  118  (1891). 
(1891).      Wilkins    v.     Mut.     Reserve 


§  03  Waiver  and  Estoppel  by  Agents.  99 

power  of  controlling  the  terms  of  the  contract,  the  knowledge 
bv  such  agent  of  a  forfeiture  at  the  time  the  contract  is  closed 
will  not  bind  or  estop  the  company.  This  is  clearlj'  sound.' 
If,  however,  the  agent  is  in  fact  a  general  agent,  with  authority 
like  an  officer  of  the  company  to  make  and  modify  contracts 
in  his  discretion,  his  interpretation  of  the  questions  and 
answers  in  the  application,  if  relied  on  by  the  applicant,  will 
bind  the  company,  as  will  also  knowledge  on  his  part  of  a 
cause  of  forfeiture  at  the  time  the  contract  is  closed.^  The 
Mahone  case  has  been  made  an  authority,  but  improperly,  for 
the  extension  of  the  rule  announced  in  it  to  cases  where  the 
agent  had  in  fact  no  such  extensive  authority. 

Knowledge  by  the  soliciting  agent  of  facts  constituting  a 
ground  of  forfeiture  at  the  time  of  the  inception  of  the  con-i 
tract  ought  not  to  avail  to  estop  the  company,  even  in' 
conjunction  with  the  receipt  of  premium  or  delivery  of  the 
policy,  unless  the  agent  communicate  the  knowledge  of  forfeit- 
ure to  one  having  discretionary  power  to  waive  the  conditions 
of  the  contract. 

The  acquisition  of  such  knowledge  does  not  in  any  way 
enlarge  the  powers  of  the  special  agent,  though  if  he  already 
had  the  authorit\'  to  alter  the  terms  of  the  contract  it  might 
then  become  a  factor  in  operating  an  estoppel.  If  the  know;l- 
edge  by  the  special  agent  of  a  ground  of  forfeiture  could  work 
an  estoppel  simply  because  he  was  doing  something  for  the 
company  w^hen  he  acquired  it,  then  the  knowledge  of  his  clerk 
or  office  boy  might  accomplish  the  same  result,  and  the  conclu- 
sion would  be  reached  that  the  binding  obligation  of  a  solemn 
written  contract  may  be  destroyed  by  the  casual  information 
acquired  or  said  to  be  acquired  b}'^  a  wholly  irresponsible  per- 
son doing  some  trivial  act  for  the  company  without  the  conniv- 
ance or  knowledge  of  the  company  or  any  of  its  commissioned 
agents.  Estoppel  is  a  doctrine  to  prevent  fraud.  Knowledge/ 
to  operate  as  a  waiver  of  contract  rights  should  only  be  imput-l 
able  to  the  company  when  possessed  by  some  one  w^ho  is  fairly' 
a  substitute  for  the  companyJn_tba.premisfiai_ 

The  reasoning  of  the  Iowa  court  in  Boetcher  v.  Hawkeye 

'  Kenjon  V.  Knights  Templar,  etc.,     patrick  v.   Hartford  Annuity  Co.,  r)6 
Asso.,  122  N.   Y.   247.     But  see  Fitz-     Conn.  116. 

■'  Ins.  Co.  V.  Mahone,  21  Wall.  152. 


100  Insukance  :   Fiee,  Life,  Marine.  §  94 

Insurance  Company,  that  the  soliciting  agent  of  the  company 
should  not  be  deemed  the  agent  of  the  assured,  though  the 
policy  provided  that  he  should  be,  is  weighty ;  but  their  con- 
clusion, that  knowledge  of  forfeiture  by  the  special  agent 
should  bind  the  company,  is  not  so  satisfactory.^ 

This  case,  however,  is  only  one  of  a  large  class,  and  serves  to 
illustrate  the  proposition  that  some  of  the  judges  have  enforced 
the  doctrine  that  notice  to  an  insurance  agent  is  notice  to  the 
principal  in  a  manner  unknown  to  the  general  law  of  agency. 
There  can  be  no  question  that  some  of  the  courts  have  gone  too 
far  in  this  direction ;  and  for  confirmation  of  this  view  the  re- 
cent and  carefully  considered  opinions  of  the  House  of  Lords 
should  be  consulted.^ 

A  distinction  may  perhaps  be  made  between  the  case  where 
it  is  sought  to  destroy  a  condition  of  the  contract  altogether  by 
knowledge  possessed  by  the  agent,  and  the  case  in  which  the 
agent  is  held  to  be  a  suitable  representative  for  receiving  a 
notice  pursuant  to  the  terms  of  the  policy.  In  an  English  case 
where  the  policy  provided  that  notice  must  be  given  to  the 
directors  and  their  consent  obtained  for  non-residence,  and 
the  assignee  of  the  assured  gave  notice  to  the  local  agent  of 
the  company  that  the  assured  had  left  the  country,  and  there- 
after paid  his  premiums  for  several  years  upon  the  policy,  it 
was  held  that  the  insurers,  who  had  received  these  premiums 
in  the  regular  course  of  business,  were  liable,  although  in  fact 
the  agent  had  no  authority  to  give  such  a  permit.^ 

§  94.  Effect  of  Stipulations  in  the  Policy  in  Re- 
spect to  the  Authority  of  Canvassing  Life  Agents. 

— Where  the  application  gives  truthful  notice  to  the  insured 
that  the  agent  of  the  company  has  no  authority  to  waive  con- 
ditions or  forfeitures,  or  where  the  assured  expressly  stipulates 
that  the  written  statements  of  the  application  shall  be  the  only 
statements  upon  which  the  contract  is  made,  any  errors  of  the 
agent  in  transcribing  the  answers  will  not  estop  the  company, 
'  except  as  the  assured  is  able  to  make  out  a  clear  case  of  estop- 
pel by  reason  of  acts  of  the  agent  within  the  actual  scope  of 

'  Boetcher  v.  Hawkeye  Ins.  Co.,  47        '  Wing  v.  Harvey,  5  De  G.  M.  &  G. 
Iowa,  253.  265. 

^  Blackburn   v.    Vigors,    L.   R.,   12 
App.  Cas.  631. 


§  95  Waiver  and  Estoppel  by  Agents.  101 

his  authority.*  But  where  the  error  in  the  a])phc;itioii  was 
solely  the  act  of  the  company's  agent,  the  assured  being  unable 
to  read  and  having  given  true  answers  to  the  agent  orally,  it 
was  held  that  phe  company  could  not  set  up  the  breach  of 
warranty  in  defense,  although  the  application  contained  the 
warranty  that  tlie  answers  of  the  applicant  were  full,  complete, 
and  true,  whether  written  by  his  own  hand  or  not.^ 

§  95.  Commissioned  Agents :  Fire. — The  commis. 
sioned  agents  of  fire  insurance  companies  are  more  properly 
general  agents,  and  except  as  restrictions  upon  their  authority 
are  inserted  in  the  application  or  policy,  or  otherwise  made 
known  to  the  insured,  they  are  held  to  have  power  to  waive 
conditions  and  forfeitures.^  This  conclusion  is  based  upon  the 
fact  that  they  have  authority  to  make,  cancel,  and  renew  con- 
tracts, being  furnished  with  blanks  for  that  purpose. 

The  principles  laid  down  in  the  last  two  sections  are  also 
applicable  to  the  representatives  of  fire  and  marine  companies 
as  well  as  to  life. 

The  fire  policy,  however — and  this  is  true  of  the  marine 

policy  also — does   not   ordinarily  make   the  payment  of   the 

premium  a  condition  precedent  to  the  validity  of  the  contract, 

and  a  general  agent  may  of  course  extend  credit  to  the  insured, 

or  not,  as  he  chooses.     The  general  custom  where  credit  is  given 

is  for  the  agent  to  do  so  on  his  own  responsibility.     But  in 

case  the  agent  should  make  default  in  accountinof  to  the  com- 
es o 

pany  the  policy  will  nevertheless  be  valid.  And  though  the 
policy  provide  that  it  shall  not  take  effect  until  the  premium  is 
paid  in  cash,  the  general  agent  lias  power  to  waive  the  provis- 
ion, and  will  be  held  to  have  waived  it  if  he  delivers  the  policy 
without  enforcing  payment."* 

If  at  the  time  of  receiving  the  premium  or  delivering  the 
policy  the  general  agent  has  knowledge  of  a  ground  of  forfeit- 

'  Ins.  Co.  V.  Wolff,  95  U.   S.   329.        '  Walsh  v.  Hartford  Fire  Ins.  Co., 

Messelbach  v.  Norman.  1-33  N.  Y.  578.  78  N.  Y.  5, 

Ins.  Co.  V.  Norton,  96  U.  S  240.     Wil-        *  Bodine  v.  Exchange  Fire  Ins.  Co., 

kens   V.  Mutual    Reserve   Fund   Life  51  N.  Y.    117.     Boehen  v.  Williams- 

Asso,,  54  Hun,  294.     Wa'sh  v.  Hart-  burgh  City  Ins.   Co.,   35  N.  Y.    131. 

ford  Fire  Ins.  Co.,  73  N.  Y.  5.  Walsh  v.  Hartford  Fire   Ins.   Co.,  78 

*  O'Brien  v.  Home  Benefit  Soc.  117  N.  Y.  11. 
N.  Y.  310, 


102  Insurance  :   Fike,  Life,   Makine.  §  96 

lire  already  incurred,  the  company  will  be  held  to  have  waived 
it,  because  it  would  not  be  right  for  the  company  to  accept  a 
premium  in  return  for  a  contract  which  it  knew  would  be 
worthless  to  the  other  party. ^ 

A  stipulation  tiiat  the  commissioned  agent  has  no  authority 
to  waive  except  by  written  agreement  is  binding,  unjess^the  in- 
sured is  able  to  show  that  the  commissioned  agent  had  an 
actual  authorit}'',  either  by  instructions  or  recognized  practice, 
to  waive  orally,  and  this  it  is  not  so  easy  to  do  as  before  the 
adoption  of  the  standard  fire  policy. 

§  96.  Special  Soliciting  Agents :  Fire. — They  have 
no  authority  to  waive  conditions  or  forfeitures,  but  only  to  re- 
ceive proposals  and  forward  them.^  If  they  are  intrusted  with 
the  closing  of  a  contract  of  insurance,  and  allowed  to  make  a 
delivery  of  the  policy,  it  has  been  held  that  they  have  implied 
authority  to  determine  how  the  premium  shall  be  paid,  and  if 
they  give  credit  the  policy  will  still  be  binding,  though  in  con- 
tradiction to  its  terms.^ 

§  97.  Other  Special  Agents. — A  special  agent  ap- 
pointed to  investigate  or  adjust  a  loss  has  no  implied  authority 
to  waive  an  essential  condition  of  the  contract  or  a  forfeiture."* 

The  authority  of  clerks  of  agents  or  of  insurers  is,  as  a  rule, 
limited  to  the  performance  of  ministerial  and  clerical  acts,  and 
they  are  not  to  be  allowed  to  disturb  or  alter  the  terms  of  the 
policy,  unless  such  a  result  is  naturally  involved  in  the  proper 
performance  of  the  particular  act  which  they  are  employed  to 
do.« 

'  Bennett  v.  North  British  &  M.  Ins.  '  Bodine  v.  Exchange  Fire  Ins.  Co., 

Co.,  81  N.  Y.  273.     Van  Schoick  v.  .51  N.  Y.   117.     Boehen  v.  Williams. 

Niagara  Fire  Ins.  Co.,  68  N.  Y.  434.  burgh  City  Ins.  Co.,  35  N.  Y.  131. 

Short  V.    Home  Ins.    Co.,  90  N.  Y.  "  Weed  v.  London   &   L.  Fire  Ins. 

16.  Co.,  116  N.  Y.  106.     Marvin  v.  Uni- 

•  Tate  V.  Citizens  Mut.  Ins.  Co.,  13  versal  Life  Ins.  Co..  85  N.  Y.  278. 

Gray,  79.    Lohnes  v.  Ins.  Co.  of  N.  A.,  '  Waldman  v.  North  British  &  M. 

121  Mass.  439.  Ins.  Co.,  91  Ala.  170. 


/ 


CHAPTER  IX. 

GENERAL    PRINCIPLES CONTINUED. 

Marine  Insurance. 

The  law  of  marine  insurance  is  in  so  many  particulars 
peculiar  to  that  branch  of  insurance  that  it  will  be  convenient 
to  present  by  themselves  some  of  the  principles  relating  to  it. 
The  subjects  of  insurable  interest,  concealment,  and  representa- 
tions have  already  been  touched  upon. 

§  98.  What  is  Marine  Insurance. — Marine  insurance 
is  an  insurance  against   risks,  connected    with    navigation,  to  i 
which  a  ship,  cargo,  freight,  profits,  or  other  insurable  interest 
in  movable  property  may  be  exposed  during  a  certain  voyage 
or  a  fixed  period  of  time. 

§  99.  Implied  Warranties. — There  are  three  war- 
ranties which  are  understood  in  every  contract  of  marine  insur- 
ance, and  are  as  efficacious  as  though  they  were  written  upon 
the  face  of  the  policy.  These  are  in  respect  to  seaworthiness, 
deviation,  and  the  legality  of  the  adventure. 

§  100.  Warranty  of  Seaworthiness.  —  In  every 
voyage  policy  upon  ship,  freight,  cargo,  or  other  interest  a 
warranty  is  implied  that  the  ship  is  sea  worth}'  at  the  time  of 
the  commencement  of  the  risk»J^  After  much  discussion  it  has 
been  settled  by  the  English  courts  that  no  warranty  of  sea- 
worthiness is  to  be  implied  in  a  time  policy.^  This  distinction 
is  placed  by  those  courts  upon  the  ground  that  the  warranty  of 

■  Dixon  V.  Sadler,  5  M.  and  W,  4Q5..  '  Gibson  v  Small,  24  Eng.  Law  and 

Richelieu  Nav.  Co.  v.  Boston  Ins.  Co.,  Eq.  17.    Thompson  v.  Hopper,  34  Eng. 

136  U.  S.  408  (1889).     Walsh  v.  Wash-  Law  and  Eq.  266.     Dudgeon  v.  Pem 

ington  Ins.  Co.,  32  N.  Y.  427.  broke,  L.  R.,  2  App.  Cas.  284. 


104  Jnsukanuk:    Fire,   Life,  Marine.  §100 

seaworthiness  attaches,  if  at  all,  at  the  time  of  the  commence- 
ment of  the  risk,  and  that  to  imply  such  a  warranty  in  a  time 
policy,  which  might  begin  to  run  when  the  vessel  was  in  mid- 
ocean,   would  be  inconvenient  and  unreasonable.     But  if  the 
assured  knowingly  send  the  vessel  to  sea  in  an  unseaworthy 
condition,  and  she  is  lost  in  consequence  thereof,  the  loss  will 
not  be  recoverable  under  the  policy,  though  directly  occasioned 
by  a  peril  insured  against,  because  it  resulted  from  the  wrong- 
ful act  of  the  assured.* 
/       In  the  United  States  a  warranty  of  seaworthiness  is  always 
I  implied  in  a  voyage  policy,  but  with  reference  to  time  policies 
\  the  decisions  of  the  different  courts  are  not  in  harmony. 

The  Connecticut  court  has  decided  for  that  State  that  no 
distinction  exists  between  the  two  classes  of  marine  policies,' 
but  the  opinion  of  the  court  in  that  case  can  hardly  be  said  to 
have  considered  or  disposed  of  all  the  difficulties  attaching  to 
such  a  rule.  By  the  weight  of  opinion  in  this  country,  the  war- 
ranty is  at  any  rate  to  be  implied  in  those  cases  where  the  ves- 
sel insured  by  the  time  policy  is,  at  the  time  of  the  commence- 
ment of  the  risk,  at  a  port  where  repairs  could  be  made.  This 
is  the  conclusion  at  which  the  Massachusetts  court  arrived  in 
an  ably  considered  case,  beyond  which  the  court  was  not  will- 
ing to  commit  itself  at  that  time.^  In  a  more  recent  case,  how- 
ever, the  Illinois  court  has  decided  to  abide  by  the  English  rule.* 
In  a  still  later  case,  the  Federal  Supreme  Court  uses  the  follow- 
ing language  with  regard  to  this  subject :  "  In  the  insurance  of  a 
vessel  by  a  time  policy,  the  warranty  of  seaworthiness  is  com- 
plied with  if  the  vessel  be  seaworthy  at  the  commencement  of  the 
risk;  and  the  fact  that  she  subsequently  sustains  damage,  and  is 
not  properly  refitted  at  an  intermediate  port,  does  not  discharge 
the  insurer  from  subsequent  risk  or  loss,  provided  such  loss  be 
not  the  consequence  of  the  omission.  A  defect  of  seaworthi- 
ness arising  after  the  commencement  of  the  risk,  and  permitted 
to  continue  from  bad  faith  or  want  of  ordinary  prudence  or  dili- 
gence on  the  part  of  the  insured  or  his  agents,  discharges  the  in- 

*  Thompson  v.  Hopper,  6  El.  &  B.  '  Hoxie  v.  Pacific  Mutual  Ins.  Co., 

172,  937.  7    Allen,    211    (1863),    by    Bigelow, 

'  Hoxie  V.  Home  Ins.  Co.,  32  Conn.  C.  J. 

21   (ls64i.     So,  also,  Merchants  Mut.  *  Merchants    Ins.  Co.    n.  Morriaon, 

Ins.  Co.  V.  Sweet,  G  Wis.  67U.  62  111.  242.  (1871). 


§  iOO  Implied  Wakranties  :    Marine,  105 

surer  from  liability  for  any  loss  which  is  the  consequence  of  such 
bad  faith  or  want  of  prudence  or  diligence,  but  does  not  affect 
the  contract  of  insurance  as  to  any  other  risk  or  loss  covered 
by  the  policy  and  not  caused  or  increased  by  such  particular 
defect.y  The  effect  of  this  rule,  if  indeed  it  was  intended  to  de- 
fine an  itrvpUed  warranty,  would  seem  to  make  our  law  in  sub- 
stance not  very  different  from  the  English  law,  after  all,  except 
in  the  matter  of  classification;  for,  so  far  as  the  general  obli 
gation  of  the  insured  to  refrain  from  misconduct  is  concerned, 
the  English  court  was  of  opinion  in  one  case,  that,  if  a  vessel 
insured  under  a  time  policy  should  sail  in  an  unsea worthy  state, 
and  incur  loss  in  consequence  of  such  unseaworthiness,  without 
the  intervention  of  a  peril  insured  against  as  the  direct  cause  of 
the  loss,  such  loss  would  not  be  recoverable  under  the  policy.' 
But  it  would  seem  that  the  English  classification  is  better  than 
that  of  the  TTnited  States  Supreme  Court,  because  the  funda- 
mental notion  of  a  warranty  is  that  it  imports  an  obligation  of 
such  a  character  that  a  breach  of  it  will  cause  an  absolute 
avoidance  of  the  whole  contract  irrespective  of  its  relation  to 
the  loss. 

It  is  in  harmony  with  the  general  purpose  of  insurance  to 
make  a  contract  of  insurance,  as  far  as  may  be,  one  of  absolute 
indemnity  against  loss  by  the  specified  perils,  regardless  of 
unintentional  negligence  on  the  part  of  the  assured  or  his 
agents,  and  this  doctrine  has  received  the  high  sanction  of  the 
Federal  Supreme  Court  itself.^' 

The  New  York  court,  without  however  citing  any  of  the 
late  cases,  has  recently  stated  the  rule  in  the  following  words : 
"  In  every  case  of  marine  insurance  by  a  general  policy  cover- 
ing all  perils  of  the  sea,  where  the  vessel  insured  is  in  port, 
there  is  an  implied  warranty  that  the  vessel  is  seaworthy  at 
the  inception  of  the  policy.  It  is  a  condition  precedent  to  the 
risk,  and  if  the  vessel  is  not  seaworthy  the  policy  does  not 
attach.  In  an  action  to  recover  for  a  loss  upon  such  a  policy, 
where  the  fact  of  seaworthiness  at  the  time  of  issuing  the 
policy  is  shown,  it  is  immaterial  what  the  vessel's  condition  is 

'  Union  Ins.  Co.  v.  Smith,  124  U.  S.         ^  Orient  Ins.  Co.  v.  Adams.  123  U.  S. 
405  (1887),  Biatcliford,  J.  67  (1887). 

»  Fawcus  V.  Sarsfield,  6  EI.  &.  Bl, 
192. 


106  Insurance:    Fire,  Life,  Marine.  §  1<>1 

thereafter  during  the  voyage,  as  loss  from  unseaworthiness  is 
among  the  perils  insured  against.  The  plaintiffs,  under  such  a 
policy,  make  out  a  prima  facie  case  by  showing  seaworthiness 
at  the  inception  of  the  risk.  But  in  time  policies  there  is 
implied  a  warranty  that  the  vessel  will  be  kept  in  repair  and 
made  seaworthy  at  all  times  during  the  continuance  of  the  risk, 
\,so  far  as  that  is  reasonably  possible,  and  this  implied  covenant 
imposes  upon  the  insured  the  duty  of  active  diligence  to  keep 
the  vessel  in  good  order  and  in  a  seaworthy  condition."' 

This  language,  probably,  must  be  understood  in  a  sense 
somewhat  similar  to  that  employed  by  Mr.  Justice  Blatchford 
in  the  case  of  the  Union  Ins.  Co.  v.  Smith,  just  cited,  for  it  is 
not  to  be  supposed  that  the  court  could  spell  out  of  a  policy 
that  insures  even  against  barratry  an  absolute  and  continuous 
warrant}^  obligatory  upon  the  assured  and  his  agents  during 
the  voyage  and  in  foreign  ports  to  keep  the  ship  as  seaworthy 
as  possible. 

Where  at  the  time  of  the  commencement  of  the  risk  a  ship 
was  not  in  port,  but  off  on  a  distant  voyage,  it  was  held  that 
the  implied  warranty  of  seaworthiness  Avas  not  applicable.' 

§  101.  Seaworthiness  is  what. — A  ship  is  seaworthy 
when  reasonably  fit  to  perform  the  services  and  to  encounter 
the  ordinary  perils  incident  to  the  voyage.^ 

This  requires  that  the  ship  on  sailing  should  be  tight  and 
staunch  in  hull,  properly  rigged  and  laden,  provided  with  a 
competent  master,  a  sufficient  number  of  competent  officers 
and  seamen,  as  well  as  with  a  pilot  when  required  by  law  or 
custom,  and  with  the  requisite  appurtenances  and  equipments 
such  as  ballast,  cables,  anchors,  cordage  and  sails,  food,  water, 
fuel  and  lights,  and  other  necessary  or  proper  stores  and  imple- 
ments for  the  voyage.'* 

Her  cargo  must  be  properly  stowed,  and  the  weight  of  it 
not  in  excess  of  the  vessel's  safe  carrying  capacity. 

In  the  case  of  an  insurance  being  effected  on  cargo  which  is 

'  Berwind  v.  Greenwich  Ins.  Co.,  114  Q.  B.  596.     Thebaud  v.  Phoenix  Ins. 

N.  Y.  234  (1889),  Brown.  J.  Co. ,  52  Hun.  495  (1889),  by  Van  Brunt, 

«  Jones  V.  Ins.  Co.,  2  Wall,  Jr.  278.  P.  J. 

•  Merchants  Trading  Co.  v.  Univer-        *  M'Lanahan  v.  Universal  Ins.  Co., 

sal  Marine  Co..  referred  to  in  L   R.,  9  1  Pet.  170. 


§  101  Implied  Wakkanties  :    Marine.  lOT 

of  such  a  nature  or  so  stowed  as  to  I'ender  the  vessel  unsea- 
worthy,  it  will  be  no  extenuation  to  show  that  in  case  of  need 
the  cargo  can  be  readily  jettisoned,  for  the  warranty  of  sea- 
worthiness is  to  be  considered  in  relation  to  the  subject-matter 
insured,  and  cannot  be  taken  to  contemplate  the  destruction  of 
that  ver^^  cargo  which  it  is  designed  to  protect.^ 

Neither  the  ignorance  nor  the  innocence  of  the  insured  will 
avail  to  relieve  him  from  the  consequence  of  a  breach  of  tlu> 
warranty,  though  all  reasonable  precautions  were  taken  to 
secure  the  seaworthiness  of  the  vessel  on  sailing,  and  her  unsea- 
worthy  condition  arose  from  a  latent  defect.  For  an  actual 
fulfillment  of  the  implied  condition  is  indispensable.  Upon 
the  same  principle,  an  insurance  on  cargo  is  invalidated  if  the 
vessel  sail  unseaworthy,  though  the  assured  be  ignorant  of  her 
state,  or  powerless  to  alter  it.^ 

The  implied  condition  of  seaworthiness  is  to  be  confined  to 
the  ship  by  which  the  insurance  is  effected,  and  cannot  be 
extended  to  lighters  employed  to  land  the  cargo.^  There  is  no 
implied  warranty  that  the  cargo  itself  is  seaworthy.* 

The  standard  of  seaworthiness  required  to  satisfy  the  war- 
ranty is  not  uniform  in  every  case,  but  variable  according  to 
circumstances.  Thus,  if  the  voyage  comprises  several  distinct 
stages,  each  of  which  requires  a  different  degree  of  seaworthi- 
ness, the  warranty  will  at  least  be  sa.tisfied  if  the  vessel  is  sea- 
worthy for  each  stage  alone  at  the  commencement  of  it.  For 
instance,  in  a  policy  "  at  and  from,"  the  risk  is  divisible  into  two 
distinct  parts,  the  risk  in  port  and  the  risk  at  sea,  and  a  differ- 
ent degree  of  seaworthiness  is  required  at  the  commencement 
of  each  of  these  sections.  The  vessel  on  sailing  must  be  fit  for 
the  voyage,  but  for  the  risk  to  attach  in  port  it  is  only  neces- 
sary that  she  should  have  arrived  there  Jn  a  state  of  sufficient 
seaworthiness  to  lie  in  reasonable  security  until  properly 
repaired  and  equipped  for  the  voyage.^ 

So  where  the  voyage  consists  partly  of  river  and  partly  of 

'  Daniells  v.  Harris,  2  Asp.  Mar.  L.  "  Koebel  v.  Saunders,  17  C.  B.  N.  S. 

C.  413.  71. 

*  Oliver  v.  Cowley  Park  Insurance,  '  Parmeter  v.  Cousins,  2  Camp.  235. 

470.  Haughton  v.  Empire  Marine  Ins.  Co., 

» Lane  v.  Nixon,   L.    R.,  1   C.  P.  L.  R.,  1  Exch.  306. 
413. 


108  Insurance  :    Fike,  Lifk.  Marine.  §  102 

sea  navigation,  and  requires  a  different  state  of  equipment  for 
each  stage.' 

If  the  vessel  be  unseaworthy  for  any  distinct  stage  of  the 
adventure  on  entering  upon  it,  the  poHcy,  it  has  been  held, 
w^ill  be  avoided,  and  no  subsequent  loss  will  be  recoverable, 
though  the  defect  may  have  been  r-emedied  before  loss,  and  the 
loss  have  occurred  irrespective  of  it.^ 

The  warranty  of  seaworthiness  in  general  only  attaches  at 
the  inception  of  the  risk  ;  so  that  in  the  case  of  an  insurance 
out  and  home,  if  the  risk  be  one  and  indivisible,  the  starting  of 
the  vessel  outward  in  a  seaworthy  state  will  satisfy  the  war- 
ranty, and  there  will  be  no  breach  though  the  vessel  should  be 
unseaworthy  upon  sailing  on  her  homeward  passage  or  from 
any  intermediate  port. 

The  standard  of  seaworthiness  may,  also,  have  a  relation  to 
the  character  of  the  ship  insured,  and  if  an  insurer  agrees  with 
full  knowledge  of  the  facts  to  insure  a  vessel  incapable,  from 
size  or  construction,  of  being  brought  up  to  the  ordinary  stand- 
ard of  seaworthiness,  the  implied  warranty  will  be  satisfied  if 
the  vessel  is  made  as  seaworthy  as  her  capacity  will  admit 
oV 

But,  as  a  rule,  the  character  of  the  voyage,  rather  than  the 
purpose  for  which  the  ship  was  originally  constructed,  must 
determine  the  question  whether  this  warranty  has  been 
kept." 

Where  the  nationality  or  neutrality  of  a  ship  or  cargo  is  an 
express  warranty,  it  is  implied  by  the  warranty  of  seaworthi- 
ness that  the  ship  will  carry  the  requisite  documents  to  show 
such  nationality  or  neutrality.^ 

§  10!3.  Implied  Warranty :  Deviation. — There  is  a 
second  implied  warranty  in  marine  insurance;  namely,  that 
when  the  voyage  contemplated  by  a  polic}'^  is  described  by 
places  of  beginning  and  ending,  there  shall  be  no  voluntary 

•  Bouillon  V.  Lupton,  33  L.  J.  C.  P.        *  Thebaud  v.   Phoenix  Ins.  Co.,    52 
87.  .  Hun,  495. 

»  Quebec  Marine   Ins.  Co.  v.  Com.         '  Christie  v.  Secretan,  8  T.  R.  199l 
Bank  of  Canada,  L.  R.,  3.  P.  C.  234.       Elting  v.  Scott,  2  Johns,  157. 

•  Burgas  v.  Wiclcham,  33  L.  J.  Q.  B. 
17. 


§  102  Implied  Warranties  :    Marine.  109 

deviation  or  departure  from  the  course  fixed  by  mercantile 
usage,  and  no  unreasonable  delay  in  the  commencement  or 
prosecution  of  the  voyage.^        /;  -^    "^  ^ 

If  the  course  of  sailing  between  the  places  named  is  not 
fixed  by  mercantile  usage,  such  a  course  must  be  pursued  as 
would  appear  reasonably  direct  and  advantageous  to  a  master 
of  ordinary  skill  and  discretion.^ 

A  deviation  is  a  variation,  and  not  necessarily  an  increase  of 
the  risk  insured.^ 

"Where  a  policy  of  insurance  was  efi'ected  on  a  ship,  at  and 
from  Montreal  to  Montevideo,  and  a  delay  occurred  in  the 
arrival  of  the  vessel  at  Montreal,  which,  by  converting  the  voy- 
age from  a  summer  into  a  winter  one,  materially  affected  the 
risk*and  rate  of  premium,  it  was  held  that  the  policy  would 
not  attach.* 

An  alteration  in  the  vessel's  port  of  destination  is  fatal  to 
the  contract.  ' 

If  a  vessel  is  insured  to  several  ports  of  discharge  not  men- 
tioned  by  name  in  the  policy,  she  must  visit  them  in  the  geo- 
graphical order  in  which  they  occur  from  the  port  of  departure ; 
but,  if  the  ports  are  designated  by  name,  they  must  be  visited 
in  the  order  in  which  they  are  mentioned  in  the  policy.  It 
is  not,  however,  essential  that  a  vessel  thus  insured  should  pro- 
ceed to  all  the  ports  named.  She  may  go  to  one  or  more  and 
omit  the  rest.  But  such  ports  as  she  does  call  at  must  be 
visited  in  the  order  above  described,  and  it  is  not  lawful  for  her 
to  re-visit  any.  This  rule  is  binding  unless  the  departure  is 
warranted  by  recognized  usage.^ 

A  deviation  from  the  direct  course  of  the  voyage  insured, 
though  in  conformity  with  usage,  will  not  be  covered  unless 
made  in  furtherance  of  the  adventure  to  which  the  policy 
relates.^ 

;       '  Burgess  v.  Ec[uitable  Marine  Ins.  <  'ranch.  26.     Snyder  v.  Atlantic  Mu- 

f\.  ,  1'26  Mass.  70.   ^  tual  Ins.  Co.,  95  N.  Y.  196  ;  s.  c,  47 

'  Hearne   v.    Marine   Ins.    Co.,    20  Am.  Rep.  29. 

Wall.  488.    Turner  v.  Protection  Ins.  ■*  De  Wolf  v.  Archangel  Mar.  Bank 

Co..  25  Me.  51")  ;  s.  c,  43  Am.  Dec.  &  Ins.  Co.,  2  Asp.  Mar.  L.  C.  273. 

294.     Reads  v.  Commercial  Ins.  Co.,  ^  McCall  v.  Sun  Mutual  Ins.  Co..  66 

8    Johns.    352;     s.  c.    3    Am.    Dec.  N.  Y.  .i05. 

495.  "  Pearson     v.     Commercial     Union 

*  Maryland    Ins.    Co.    v.    Leroy,    7  Assur.  Co.,  L.  R.,  1  App.  Cas.  498. 


110  Insurance  :   Fire,  Life,  Marine.  §  103 

§  103.  Deviation,  wlieii  Proper. — A  deviation  is 
justifiable,  and  does  not  exonerate  the  insurers,  if  it  is  necessi- 
tated  either  by  jphysical  or  by  moral  force.^ 

Thus  a  deviation  is  proper  when  caused  by  circumstances 
over  which  neither  the  master  nor  the  owner  of  the  ship  has 
any  control,  or  when  necessary  to  comply  with  a  warranty  or 
to  avoid  a  peril  whether  insured  against  or  not,  or  when  made 
in  good  faith  and  upon  reasonable  grounds  of  belief  in  its  neces- 
sity to  avoid  a  peril,  or  when  made  in  good  faith  for  the  pur- 
pose of  saving  human  life  or  relieving  another  vessel  in  distress. 

If  a  vessel  is  forcibly  diverted  from  her  course  by  stress  of 
weather,  the  compulsion  of  an  enemy  in  time  of  war,  or  the 
violence  of  a  mutinous  crew,  such  a  deviation  is  excusable.  If 
a  vessel  put  into  a  port  outside  the  ordinary  course  for  r^airs 
or  necessary  supplies,  or  to  set  her  cargo  in  order,  or  to  procure 
fresh  hands  required  for  the  navigation,  or  if  she  remain  in  her 
port  of  lading  to  avoid  a  capture,  or  depart  from  the  usual 
course  from  the  same  motive,  or,  in  short,  if  she  commit  any 
deviation  the  adoption  of  which  is  so  urgently  demanded  by 
the  force  of  circumstances  as  to  become  imperative  to  a  reason- 
able mind,  the  divergence  will  not  invalidate  the  policy. 

A  departure  from  an  ordinar}''  course  of  the  voyage  with 
the  object  of  saving  persons  whose  lives  are  in  jeopardy  is 
allowed  on  the  ground  of  humanity,  but  the  same  immunity 
will  not  be  extended  in  favor  of  a  deviation  made  solely  for  the 
purpose  of  saving  property.^  A  departure  to  learn  whether  a 
port  not  of  destination  is  blockaded  is  a  deviation.^  Unreason- 
able delay  amounts  to  a  deviation.^  In  time  policies,  especially 
on  voyages  in  inland  waters,  a  deviation  from  the  permitted 
course  has  been  held  to  suspend  and  not  to  avoid  the  policy.^ 

§  104.  Illegality. — There  is  a  third  implied  warranty, 
that  the  adventure  shall  be  a  legal  one  both  as  regards  its 
nature  and  the  mode  in  which  it  is  prosecuted.." 

'  Burgess  v.  Equitable  Marine  Ins.  "  Audenreid  v.  Mercantile  Mut.  Ins. 

Co..  126  Mass.  70.  Co.,  60  N.  Y.  482. 

'  Co.  of  African  Merchants  v.  Brit-  '  Wilkins  v.    Ins.  Co.,  80  Ohio  St. 

ish  &  Foreign  Marine  Ins.  Co.,  Ij.  R.,  317.     Greenleaf  v.  St.  Louis  Ins.  Co., 

8  Exch.  154.  37  Mo.  25.     Hennessey  v.  Manhattan 

=  Maryland   Ins.    Co.    v.    Woods,    6  Fire  Ins.  Co.,  28  Hun,  98. 

Cranch,  39.  '  Redmond  v.  Smith,  7  M.  &  G.  467 


§  104  Implied   Warka.nties  :    Marine.  Ill 

Some  authorities  say  that  illegality  avoids  the  contract  be- 
cause of  its  concealment  rather  than  because  it  involves  any 
violation  of  an  implied  warranty. 

Smuggling  voj^ages,  trading  adventures  to  an  enemy's  port, 
and  all  other  entei'})rises  prohibited  by  the  law  of  the  land  or 
by  the  law  of  nations,  being  illegal,  no  policy  of  insurance  will 
be  upheld  if  effected  with  the  intent  to  cover  them;  but  this 
prohibition  has  been  held  in  England  not  to  apply  to  trading 
adventures  undertaken  in  violation  of  the  revenue  laws  of  other 
nations.^ 

Smuggling  or  other  illegal  conduct  by  the  master  or  crew, 
without  connivance  of  the  ship-owner,  would  not  suffice  to 
vitiate  the  contract ;  for  such  acts  would  amount  to  barratry, 
which  the  polic}^  expressh''  covers. 

Policies  upon  risks  which  contravene  either  the  statutes 
enacted  to  regulate  trade  and  navigation,  or  the  commercial 
treaties  entered  into  with  other  countries,  are  void  equally  with 
those  which  run  counter  to  the  revenue  laws,  subject  however 
to  the  exception,  that,  if  the  adventure  can  be  carried  on  with- 
out violating  the  law,  an  illegal  act  performed  in  tbe  prosecu- 
tion of  it  will  not  invalidate  the  policy  unless  committed  by  or 
with  the  concurrence  of  the  assured.^ 

Thus  in  a  case  where  the  master  of  a  vessel  in  the  timber 
trade  stowed  a  portion  of  the  cargo  on  deck  during  the  winter 
season,  and,  contrary  to  statute,  sailed  without  a  clearance  cer- 
tificate that  the  cargo  was  below  deck,  it  was  held  that  the 
illegality  did  not  vitiate  the  policy,  it  having  been  committed 
without  the  knowledge  or  privity  of  the  owner.-^ 

Again,  where  a  ship  not  licensed  by  the  board  of  trade  to 
carry  passengers  did  carry  them,  it  was  held,  that,  inasmuch  as 
such  carriage  was  the  unautiiorized  act  of  the  master  alone, 
without  the  knowledge  of  Ihe  owners,  and  contrary  to  their 
intentions,  the  policy  was  not  vitiated  by  it.* 

There  are  risks  which  it  is  illegal  to  insure  not  because  they 
are  at  variance  with  the  permanent  law  of  the  land,  but  because 
they  are  opposed  to  public  policy,  especially  in  times  of  war, 

'  Lever  v.  Fletcher,  Park  on  Ins.,  p.  '  Wilson  v.  Rankin,  L.  R  ,  1  Q.  B. 

237.  162. 

'  Waugh  V.  Morris,  L.  R.,  8  Q.  B.  *  Dudgeon  v.  Pembroke,  2  Asp.  Mar. 

202.  L.  C.  323. 


112  Insurance:    Fire,   Life,  Marine.  §105 

Such,  for  example,  are  insurances  effected  on  behalf  of  alien 
enemies,  or  to  cover  trading  adventures  to  an  enemy's  port, 
which  in  both  cases  are  wliolly  void  and  inoperative. 

The  case  is  different  with  respect  to  insurances  effected 
upon  the  property  of  neutrals  against  war  risks  which  are  not 
invalid  in  tiie  neutral  country,  though  the  adventure  to  which 
they  attach  may  be  liable  to  capture  by  a  belligerent.  For 
instance,  in  the  event  of  a  ])ort  being  blockaded,  a  trading  ad- 
venture by  neutrals  to  run  the  blockade,  though  liable  to  con- 
fiscation under  the  laws  of  war,  is  not  illegal,  and  may  therefore 
be  made  the  subject  of  a  valid  insurance  in  the  neutral  country.' 

As,  however,  the  ordinary  risk  is  much  enhanced  by  such  an 
enterprise,  the  intention  of  the  assured  must  be  disclosed  to  the 
underwriter  at  the  time  when  the  insurance  is  effected  ;  other- 
wise the  policy  will  be  void  on  the  ground  of  concealment. 

§  105.  Actual  Total  Loss. — -An  actual  total  loss  occurs 
when  the  subject  insured  wholly  perishes,  or  its  recovery  is 
rendered  irretrievably  hopeless.^ 

Thus,  for  instance,  when  a  vessel  founders  in  a  gale,  or  is 
captured  by  an  enemy  ^  and  is  condemned  as  a  prize.  When- 
ever the  thing  insured  is  by  the  operation  of  a  peril  insured 
against  reduced  to  such  a  state  as  to  be  incapable  of  use  under 
its  original  denomination,  there  is  an  actual  total  loss.  For 
example,  if  a  ship  is  so  injured  by  the  pei'ils  of  the  sea  as  to  be 
incapable  of  repair,  the  loss  is  actual,  though  her  materials  sur- 
vive either  in  fragments  or  bound  tocjether  in  the  original  form. 
And  again,  if  goods  are  so  badly  damaged  as  to  become  in- 
capable of  use  for  the  purpose  intended,  there  is  an  actual  total 
loss.* 

If  a  ship  is  sold  and  so  lost  to  the  owner  under  a  decree  of 
a  court  of  competent  jurisdiction  in  favor  of  salvors  and  in 
consequence  of  a  peril  insured  against,  it  is  an  actual  total  loss, 
and  therefore  the  person  insured  is  entitled  to  payment  without 
notice  of  abandonment.^ 

'  Arnould  on  Insurance,  p.  640.  *  Roux  v.  Salvador,  3  Bing.  N.  C. 

'  Carr  v.  Insurance  Co.,   109  N.  Y.  281.     Great  West.  Ins.  Co.  v.Pogarty, 

504.  19  Wall.  640. 

'Rhinelander  v.  Ins.  Co.,  4  Cranch,  '  Cossman  v.  West,  L.  R.,  13  App. 

29.  Cas.  160. 


§  106  Constructive  Total  Loss.  113 

An  insurance  confined  in  terras  to  a  total  loss  covers  a  loss 
which  deprives  the  insured  of  the  possession  at  the  port  of  des- 
tination of  the  entire  thing  insured,  or  which  renders  it  entirely 
worthless,  and  also  covers  a  general  average  loss.^ 

§  106.  Constructive  Total  Loss. — A  constructive  total 
loss  occurs  when  the  subject  insured,  though  still  existing  in 
specie,  is  justifiably  abandoned  on  account  of  its  destruction 
being  highly  probable,  or  because  it  cannot  be  preserved  from 
actual  total  loss  unless  at  a  cost  greater  than  its  value  would  be 
if  such  expenditure  were  incurred.^ 

The  right  to  an  abandonment  is  to  be  determined  by  the 
situation  at  the  time  of  abandonment.^ 

To  exist  in  specie  is  to  be  capable  of  utilization  as  the  thing 
insured.  The  difference  between  an  actual  and  a  constructive 
total  loss  is  that  in  the  former  case  the  loss  of  the  thing  in- 
sured to  the  owner  thereof  is  ascertained  and  permanent,  while 
in  the  latter  case  it  is  inferential  or  temporary."*  For  instance, 
where  a  ship  is  so  damaged  as  to  be  incapable  of  repair,  the 
loss,  as  we  have  already  seen,  is  actual;  but,  where  the  damage 
is  susceptible  of  repair  only  at  a  cost  exceeding  the  value  of  the 
ship  when  repaired,  the  loss  is  constructive. 

Again,  where  the  vessel  founders  in  deep  water,  so  as  to  leave 
no  reasonable  hope  of  recovery,  the  loss  is  actual  ;  but  where 
the  vessel  sinks  in  shallow  water,  so  as  to  admit  of  a  reason- 
able hope  of  raising  and  restoring  her  only  at  a  cost  exceeding 
her  value  when  raised  or  restored,  the  loss  is  constructive. 

Upon  the  same  principle,  where  goods  are  so  damaged  by 
sea  perils  that  they  cannot  be  brought  to  their  destination  in 
specie,  the  loss  is  actual;  but  where,  though  damaged,  it  is  possi- 
ble to  bring  them  to  their  destination  in  specie  only  at  a  cost 
exceedino:  their  value  when  so  broufjht,  the  loss  is  constructive.* 

'  Mayo  V.  India  Mut.  Ins.  Co.,  152  *  Maggrath  v.  (^hurch,  1  Caines,  196; 

Mass.    172   (1890).     Benson   v.   Chap-  s.  c,  3  Am.  Dec   173. 

man,   6  M.   &   G.    810.      Chadsey  v.  '  Irving  v.    Manning,   1  H.  L    Cas. 

Guion.  97  N.  Y.  333.  304.     Rodocanochi  v.   Elliott,  2  Asp. 

'  Hugg  V.  Augusta  Ins.  &  Banking  Mar.  L.  C.  399.     Aranzamendi  v.  La. 

Co..  7  How.  (U.  S.),  595.     Ins.  Co.  v.  Ins.  Co.,  2  La.  432  ;  s.  c,  22  Am.  Dec. 

Fogarty,  19  Wall.  640.  136.     Rosetto    v.    Gurney,    11    0.   B. 

'  Orient  Ina.  Co.  v.  Adams,  123  U.  196. 

8 


i4  Insurance  :    Fire,  Life,  Marine.  §  107 

§  107.  Constructive  Total  Loss  :  United  States.— 

In  the  United  States  a  somewhat  arbitrary  rule  has  been 
adopted  in  order  to  make  it  easier  to  determine  whether  the 
insured  is  entitled  to  claim  a  constructive  total  loss.  It  is  here 
held  that  a  person  insured  by  a  contract  of  marine  insurance 
may  abandon  the  thing  insured,  or  any  particular  portion  there- 
of separately  valued  by  the  policy  or  separately  insured,  and 
recover  for  a  total  loss  thereof  in  the  following  cases  :  (1)  If 
more  than  half  thereof  in  value  is  actually  lost  or  would  have 
to  be  expended  to  recover  it  from  the  peril:  (2)  if  it  is  injured  to 
such  an  extent  as  to  reduce  its  value  more  than  one-half ;  (3) 
if  the  thing  insured  being  a  ship,  the  contemplated  voyage  can- 
not be  lawfully  performed  without  incurring  an  expense  to  the 
insured  of  more  than  half  the  value  of  the  thing  abandoned  or 
without  incurring  a  risk  which  a  prudent  man  would  not  take 
under  the  circumstances ;  or  (4)  if  the  thing  insured  being 
cargo  or  freight,  the  voyage  cannot  be  performed  nor  another 
ship  procured  b}^  the  master  within  a  reasonable  time  and  with 
reasonable  diligence  to  forward  the  cargo  without  incurring 
the  like  expense  or  risk.  Subdivisions  (3)  and  (4)  would  cover, 
for  example,  the  case  of  interruption  by  embargo.' 

With  respect  to  freight,  in  case  it  is  impossible  to  earn  that 
subject  owing  to  a  total  loss  of  ship  or  cargo,  the  loss  is  actual 
and  can  be  recovered  without  notice  of  abandonment.  Where, 
however,  the  loss  though  probable  is  not  ascertained,  but  depends 
upon  chances  of  recovery  or  estimated  expenditure,  the  claim 
falls  within  the  category  of  constructive  total  loss,  and  requires 
the  same  kind  of  proof  as  in  the  case  of  similar  claims  upon 
ship  or  cargo.^ 

Thus  if  the  ship  be  damaged  so  far  as  not  to  be  worth  re- 
pairing, but  cargo  which  was  on  board  be  saved  under  circum- 
stances which  leave  it  doubtful  whether  such  cargo  might  or 
might  not  be  forwarded  in  a  substituted  ship,  or  if  the  cargo  be 
lost  and  the  ship  may  or  may  not  earn  some  freight  by  carry- 
ing other  goods  on  the  voj'^age  insured,  in  order  to  make  certain 
of  his  right  to  recover  as  for  a  total  loss  on  the  policy  on  freight 

'  McConochie  v.  Sun  Mut.  Ins.  Co.,  v^_AdamSi_123_IL_S^7.     DePeyster 

2GN.  Y.  477.     Bradlie  v.  Md.  Ins.  Co.,  v.  Sun  Mut.  Ins.  Co.,  19N.  T.  272. 

12  Pet.  378.     Peele  v.  Merchants  Ins.  «  HubbeJl  v.  Great  West.  Ins.  Co., 

Co.,  3  Mason,  27-85.     Orient  Ins.  Co.  74  N.  Y.  246. 


§  108  Abandonment.  115 

the  assured  should  give  notice  of  abandonment  of  the  chance 
of  earning  such  substituted  freight.^ 

The  same  rule  will  apply  in  case  the  contract  of  affreight- 
ment is  justifiably  terminated  by  a  delay  resulting  from  the 
operation  of  the  perils  insured  against.  Thus  a  ship  which  was 
bound  from  Liverpool  to  ISTewport,  where  she  was  to  load  a 
cargo  of  iron  rails  for  San  Francisco,  got  ashore  in  Carnarvon 
Bay,  and  although  ultimatel}^  floated  and  repaired  was  detained 
for  so  great  a  length  of  time  in  consequence  of  the  accident 
that  the  charterers  threw  up  the  charter  and  hired  another 
vessel  to  carry  the  rails  which  were  wanted  for  the  construction 
of  a  railway  to  their  destination. 

In  an  action  by  the  assured  on  the  policy  of  insurance  to 
recover  for  a  loss  of  the  chartered  freight,  the  jury  found  that 
the  time  necessary  for  getting  the  ship  off  and  repairing  her 
V7as  so  long  as  to  put  an  end,  in  a  commercial  sense,  to  the 
speculation  entered  into  by  the  ship-owners  and  the  charterers; 
and  upon  this  finding  it  was  held  by  the  Exchequer  Chamber, 
affirming  the  decision  of  the  court  below,  that,  the  adventure 
having  been  frustrated  by  perils  of  the  seas,  there  was  a  con- 
structive total  loss  within  the  policy  for  which  the  assured  was 
entitled  to  recover.^ 

§  108.  Notice  of  Abandonment. — Whenever  a  claim  . 
is  made  for  a  constructive  total  loss,  a  timely  notice  of  aban-l 
donment  by  the  assured  to  the  underwriters  is  a  condition! 
precedent  to  the  right  to  recover,  unless  the  assured  is  excused! 
from  the  obligation  to  give  notice  of  abandonment  by  the  cir-i 
cumstances  of  the  case.^ 

The  only  occasion  in  which  notice  of  abandonment  is  not 
necessary  is  where,  at  the  time  the  assured  elects  to  treat  the 
claim  as  one  of  constructive  total  loss,  there  is  no  possibility 
of  the  underwriter  deriving  any  advantage  from  such  notice, 
either   because   there   is   nothing  to   abandon  or  because  the 

'  Rankin  v.  Potter,  2  Asp.  Mar.  L.  v.    Mass.    Fire   &    Marine    Ins.    Co., 

C.  67.  2    Pick     104  ;     s.c,    20    Am.     Dec. 

'  Jackson  v.  Union  Marine  Ins.  Co.,  400. 
L.   R.,  10  C.   P.   125.     Allen  v.   The        '  Kaltenbach  v.   Mackenzie,  4  Asp. 

Mercantile  Mutual  Ins.  Co.,  44  N.  Y.  Mar.  L.  ('.  39.     MeConoehie  v.  Sun 

437;    s.c,  4   Am.  Rep.    700.     Clark  Mut.  Ins.  Co.,  26  N.  Y.  477. 


/ 


116  Insurance  :   Fire,  Life,  Marine.  §  109 

disposal  of  the  projjerty  was  justiliably  determined  before  the 
opportunity  to  give  notice  occurred.  For  instance,  where  the 
news  of  the  loss  of  the  ship  and  of  her  sale  reached  the  assured 
at  the  same  time,  it  was  held  that  the  underwriters  were  liable 
for  a  total  loss  without  notice  of  abandonment ; '  and  the  same 
conclusion  was  arrived  at  under  similar  circumstances  in  an 
action  upon  a  policy  of  insurance  on  cargo.^ 

In  all  other  circumstances,  however,  the  giving  of  a  notice 
of  abandonment  is  a  necessary  preliminary  to  a  right  to  recover 
for  a  constructive  total  loss. 

There  is  a  difference  between  an  abandonment  and  a  notice 
of  abandonment.  If  a  marine  insurer  pays  for  a  loss  as  if  it 
were  an  actual  total  loss,  it  is  held  in  England  that  he  is 
entitled  to  whatever  may  remain  of  the  thing  insured  or  its 
proceeds  or  salvage  as  if  there  had  been  a  formal  abandon- 
ment.' 

A  notice  of  abandonment  is  a  notification  by  the  assured 
to  the  underwriters  that  he  elects  to  treat  the  case  as  one 
of  total  loss  made  while  the  happening  of  the  loss  is  prospec- 
tive. 

An  abandonment  must  be  made  within  a  reasonable  time 
after  information  of  the  loss,  and  after  the  commencement  of 
the  voyage,  and  before  the  party  abandoning  has  information 
of  its  completion.  It  is  reasonable  that  the  assured  should,  on 
deciding  to  claim  for  a  total  loss,  promptly  give  notice  of  his 
intention  to  the  underwriters  in  order  that  the  latter  may  be 
given  the  opportunity  to  take  any  steps  which  they  may  deem 
advisable  for  the  recovery  of  the  property  or  for  the  realization 
of  salvage  if  the  property  is  recoverable.  No  specific  form  is 
necessary  for  giving  notice  of  abandonment,  nor  is  it  essential 
that  it  should  be  made  in  writing,  though  it  is  customary  and 
advisable  so  to  give  it.  But  the  abandonment  tendered  must 
be  neither  partial  nor  conditional.^ 

§  109.  Effect  of  Abandonment. — The  abandonment, 
if  accepted  by  the  underwriters,  or  if  justified  by  the  facts  of 

'  Farnworth  v.  Hyde,  2  Mar.  L.  R.  '  Stewart  v.  Greenock  Mar.  Ins.  Co., 

187  and  429.  2  H.  L.  Cas.  183. 

'  Roux  V.  Salvador,  3  Bing.  N.   C.  *  Bosley   v.   Chesapeake  Ins.   Co.,  8 

366.  Gill  &  J.  450  ;  S.C.,  23  Am.  Dec.  337. 


§  109  Abandonment.  117 

the  case,  is  equivalent  to  a  transfer  of  his  interest  by  the  insured 
to  the  insurer  with  all  chances  of  recovery  and  indemnity.' 

An  acceptance  of  an  abandonment  is  not  to  be  presumed 
from  the  mere  silence  of  the  insurers  upon  receiving  the  notice, 
but  may  be  inferred  from  their  acts  as  well  as  their  words,^  as 
where  the  insurers  take  possession  and  do  not  return  within  a 
reasonable  time.^ 

If  the  insurers  accept  the  notice  of  abandonment,  the  rights 
of  the  parties  are  fixed  by  the  acceptance,  and  neither  of  them 
can  draw  back,  whatever  may  be  the  event.^ 

If  an  insurer  refuses  to  accept  a  valid  abandonment,  he  is 
liable  as  upon  an  actual  total  loss,  deducting  from  the  amount 
any  proceeds  of  the  thing  insured  which  may  have  come  to  the 
hands  of  the  insured. 

After  an  abandonment,  acts  done  in  good  faith  by  those 
who  were  agents  of  the  insured  in  respect  to  the  thing  insured 
subsequent  to  the  loss  are  at  the  risk  of  the  insurer  and  for  his 
benefit. 

A  freight  earned  previous  to  the  loss  belongs  to  the  insurer 
thereof,  but  freight  subsequently  earned  belongs  to  the  insurer 
of  the  ship.^ 

Whenever  a  loss  is  paid,  whether  total  or  partial,  the  under- 
writer who  has  paid  it  acquires  a  right  by  subrogation  to  what- 
ever may  be  recovered  by  the  assured  from  third  parties  with 
respect  to  the  loss ;  but  in  the  absence  of  an  abandonment  the 
right  is  limited  to  the  recovery  by  the  underwriter  of  the  sum 
which  he  has  paid.* 

This  right  of  subrogation,  which  in  the  case  of  partial  loss 
operates  merely  to  the  extent  of  his  loss,  is  made  absolute  by 
abandonment,  so  that  the  insurer  is  entitled  to  whatever  may 
be  recovered  with  respect  to  the  thing  insured,  though  it 
exceed  the  amount  paid  by  him.'' 

If  there  are  several  underwriters,  they  share  in  the  transfer 
of  the  interest  in  proportion  to  the  amount  of  their  several 

'  Eagle  V.  Bucher,  6  Ohio  St.  295  ;  *  Stewart  v.  Greenock  Mar.  Ins.  Co. , 

B.C.,  67  Am   Dec.  343.  2  H.  L.  Cases,  159. 

'  Provincial  Ins.   Co.  v.    Leduc,  L,  '  Burnand  v.   Rodocanachi,   L.   R., 

R.,  6  P.  C.  224.  7  App.  Cases,  339. 

*  Copelin  v.  Ins.  Co.,  9  Wall.  461.  '  North  of  England  Iron  Steamship 

*  North  West.  T.  Co.  v.  Continental  Ins.  Asso.    v.    Armstrong,   L.   E.,   5 
Ins.  Co.,  84  F.  R.  171.  Q.  B.  244. 


118  iNstiRANOE:   Fire,   Life,  Marine.  §  110 

Bubscriptions.*     By  an  abandonment  the  insurer  can  have  no 
gi-eater  rights  than  the  insured  had." 

§  110.  Measure  of  Indemnity. — A  marine  insurer,  as 
has  been  previously  stated,  is  liable  upon  a  partial  loss  only  for 
such  proportion  of  the  amount  insured  by  him  as  the  loss  bears 
to  the  value  of  the  whole  interest  of  the  insured  in  the  prop- 
erty insured.^  But  in  a  valued  policy  the  value  of  the  interest 
is  agreed  upon  in  advance,  and  is  conclusive  in  the  absence  of 
fraud.* 

Where  profits  are  separately  insured  in  a  contract  of  marine 
insurance,  the  insured  is  entitled  to  recover  in  case  of  loss  the 
proportion  of  such  profits  equivalent  to  the  proportion  which 
the  value  of  the  property  lost  bears  to  the  value  of  the  whole. 

§  111.  Valuation  Apportioned. — In  case  of  a  valued 
policy  of  marine  insurance  on  freight  or  cargo,  if  a  part  only  of 
the  subject  is  exposed  to  risk  the  valuation  applies  only  in  pro- 
portion to  such  part.^ 

Where  profits  are  valued  and  insured  by  a  contract  of 
marine  insurance,  a  loss  of  the  profits  is  presumed  from  a  loss 
of  the  property  out  of  which  they  were  expected  to  arise,  and 
the  valuation  of  the  policy  fixes  their  amount.* 

§  112.  Loss  under  an  Open  Policy. — A  loss  under 
an  open  policy  of  marine  insurance  is  ascertained  as  follows : 
(1)  The  value  of  a  ship  is  its  value  at  the  beginning  of  the 
risk,  including  all  articles  or  charges  which  add  to  its  perma- 
nent value  or  which  are  necessary  to  prepare  it  for  the  voyage 
insured.  (2)  The  value  of  cargo  is  its  actual  cost  to  the 
insured  w^hen  laden  on  board  ;  or,  where  that  cost  cannot  be 
ascertained,  its  market  value  at  the  time  and  place  of  lading, 
adding  the  charges  incurred  in  purchasing  and  placing  it  on 

'  Stewart    v.    Greenock    Mar.    Ins.  *  Griswold  v.  Union  Mat.  Ins.  Co., 

Co.,  2  H.  L.  Cases,  183  H    Blatch.    231.     Sturm    v.    Atlantic 

»  Delaware  Mut.  Safety  Ins.  Co.  v.  Mut.  Ins.  Co..  63  N.  Y.  77. 

Gossler,  96  U.  S.  645.  "  Davy  v.  Hallett,  3  Caines,  16;  s.c, 

*  Lamar    Ins.    Co.    v.    McGlashen,  2  Am.  Dec.  241. 

64    111.    513;     s.  c,    5    Am.     Rep.  °  Patapsco   Ins.    Co.   v.   Coulter,  8 

lOa.  Peters,  222. 


§  116  Measure  of  Liability.  119 

board,  but  without  reference  to  any  Jcwses  incurred  in  rai!-ing 
money  for  its  purchase,  or  to  any  drawback  on  its  exportation, 
or  to  the  fluctuations  of  the  market  at  the  port  of  destination, 
or  to  expenses  incurred  on  the  way  or  on  arrival.  (3)  The 
value  of  freight  is  the  gross  freight  exclusive  of  primage,  with- 
out reference  to  the  cost  of  earning  it.' 

And  in  each  case  the  cost  of  insurance  is  to  be  added  to  the 
value  then  estimated. 

§  113.  Damaged  Cargo. — If  cargo  insured  against 
partial  loss  arrives  at  the  port  of  destination  in  a  damaged  con- 
dition, the  loss  of  the  insured  is  deemed  to  be  the  same  propor- 
tion of  the  value  which  the  market  price  at  that  port  of  the 
thing  so  insured  bears  to  the  market  price  it  would  have 
brought  if  sound.^ 

§  114.  Labor  and  Expenses. — A  marine  insurer  is 
liable  for  all  the  expenses  attendant  upon  a  loss  which  forces 
the  ship  into  port  to  be  repaired ;  and,  where  it  is  agreed  that 
the  insured  may  labor  for  the  recovery  of  the  property,  the 
insurer  is  liable  for  the  expenses  incurred  thereby,  such  expense 
in  either  case  being  in  addition  to  a  total  loss  if  that  after- 
wards occurs.^ 

§  115.  Liable  for  General  Average  Losses. — A 
marine  insurer  is  liable  for  a  loss  falling  upon  the  insured 
through  a  contribution  in  respect  to  the  thing  insured  required 
to  be  made  by  him  toward  a  general  average  loss  called  for 
by  the  peril  insured  against.* 

§  116.  Insured  may  Claim  whole  Loss  from  In- 
surer, leaving  Latter  to  enforce  General  Average 
Contribution. — Where  a  person  insured  by  a  contract  of 
marine  insurance  has  a  demand  against  others  for  general 
average  contribution,  he  may  claim  the  whole  loss  from  the 

'  Stevens  V.  The  Columbian  Ins.  Co.,        *  Orrok  v.  Commonwealth  Ins.  Co., 

8  Caines,  43 ;  s.  c,  2  Am.  Dec.  247.  21  Pick.  456;  s.  c,  S2  Am.  Dec.  271. 
2  Pars.  Mar.  Ins.,  406-412.  *  Dunham  v.  Commercial  Ins.  Co., 

'  Lamar  Ins.  Co.  v.  McGlashen,  54  11    Johns.    315;    s.  c,    6    Am.   Dea 

lU.  513 ;  fl.  c,  5  Am.  Rep.  162.  874. 


'^ 


120  Insurance  :    Fire,  Life,  Marine.  §  117 

insurer,  subrogating  him  to  his  own  right  of  contribution;  but 
no  such  chiim  can  be  made  upon  the  insurer  after  the  separa- 
tion of  the  interests  liable  to  contribution,  nor  when  the 
insured,  having  the  right  and  opportunity  to  enforce  contribu- 
tion from  others,  has  neglected  or  waived  the  exercise  of  that 
right.^ 

§  117.  One-third  off  New  for  Old In  the  case  of 

a  partial  loss  of  a  ship  or  its  equipments,  the  old  materials  are 
to  be  applied  toward  payment  for  the  new,  and  a  deduction 
of  one-third  from  the  cost  of  repairing  or  replacing  the  damage 
is  made  after  deducting  the  value  of  the  old  materials,  and  the 
marine  insurer  is  liable  for  the  two-thirds  of  the  cost  of  the 
repairs.^ 

But  certain  exceptions  to  this  rule  are  allowed  by  custom, 
and  as  inserted  in  the  policies  the  rule  is  generally  modified  in 
certain  particulars. 

Anchors,  cannon,  and  sometimes  other  articles  which  are 
supposed  to  incur  no  depreciation  in  value  up  to  the  time  of 
loss  are  allowed  for  in  full ;  for  metal  sheathing  a  deduction  of 
one-fortieth  from  the  expense  of  repairing  or  replacing  (after 
first  deducting  the  value  of  the  old  metal  and  nails)  is  gen- 
erally made  for  every  month  since  the  vessel  was  last  sheathed 
until  the  expiration  of  forty  months,  after  which  time  the  cost 
of  remetaling  or  repairing  the  same  is  borne  by  the  assured. 

The  deduction  of  one-third  off  new  for  old  does  not  gener- 
all}^  apply  in  England  in  the  case  of  a  new  ship  on  her  first 
voyage,  and  a  deduction  of  one-sixth  is  sometimes  applied  to 
chain  cables.^ 

It  is  difficult  to  give  an  authoritative  definition  of  the  ex- 
tent of  a  first  voyage,  and  this  may  be  explained  by  mercantile 
usage.  The  charter  party  may  be  so  worded  as  to  make  the 
outward  and  homeward  passage  only  one  voyage.* 

This  point  is  sometimes  regulated  by  special  provisions  of 
the  policy. 

'  Maggrath  v.    Church,    1    Caines,  Johns.   315;  s.  c,   6   Am.    Dec,   374. 

196;  s.  c,  2  Am.  Dec.  173.  Orrok  v.  Commonwealth  Ins    Co.,  21 

«  Eager  v.   Atlas  Ins.  Co.,  14  Pick.  Pick  456;   s.  c,  82  Am.  Dec.  277. 

141.  *  Fenwick  v.  Robinson,   3  C.  &  P, 

*  Dunham   t.    Com.    Ins.    Co.,    11  323. 


CHAPTER  X. 

GENERAL    AVERAGE:     MARINE. 

This  subject  belongs  more  properly  to  admiralty  law  than 
to  insurance ;  but  it  is  so  intimately  connected  with  insurance 
adjustments,  and  with  the  rights  of  the  contracting  parties 
under  a  policy  of  marine  insurance,  that  it  cannot  well  be 
altogether  omitted. 

§  118.  General  Average. — The  rule  of  general  aver- 
age has  its  basis  in  the  community  of  interest  existing  between 
the  owners  of  ship  and  cargo,  by  reason  of  which  losses  inten- 
tionally incurred  for  the  common  safety  ought  to  be  equitably 
apportioned  among  the  interests  thereby  benefited. 

General  average  is  a  contribution  made  by  the  parties  to  a 
marine  adventure  to  defray  the  cost  of  extraordinary  expenses 
or  sacrifices  incurred  for  the  preservation  of  the  ship  and 
cargo.  The  distinction  between  a  general  and  a  particular^ 
average  lies  in  the  fact  that  in  the  former  case  there  is  a 
general  distribution  of  the  loss  among  the  parties  to  the  adven- 
ture, while  in  the  latter  case  there  is  a  special  application  of  the^ 
loss  to  one  or  more  of  the  parties.  Every  partial  loss  is  partic- 
ular average  in  relation  to  the  party  who  first  sustains  it, 
whether  that  loss  is  ultimately  to  be  made  good  by  a  general 
contribution  or  to  remain  where  it  falls.  The  right  to  general 
average  and  its  co-relative  obligation  are  not  founded  necessarily 
upon  contract,  but  arise  from  the  common  law  of  the  sea,  which 
is  applicable  to  all  who  are  engaged  in  maritime  commerce.^ 

The  earliest  trace  of  this  ancient  rule  of  maritime  law  is  to 
be  found  in  an  extract  from  the  Rhodian  law  which  was 
incorporated  in  the  Roman  civil  law.  Thence  it  found  its 
way  into  the  common  law  of  England,  and  became  an  implied 

»  Burton  v.  English,  L.  R.,  12  Q.  B.  D.  218. 


122  Insurance  :    Fike,  Life,  Marine.  §  119 

term  both  in  the  contract  of  affreightment  and  the  policy  of 
marine  insurance. 

§  119.  General  Average  Losses. — A  carrier  by  water 
may  in  case  of  extreme  peril  to  the  ship  and  cargo,  when  it  is 
necessary  for  the  safety  of  the  adventure,  throw  overboard  any 
or  all  of  the  cargo  or  appurtenances  of  the  ship,  or  other- 
wise sacrifice  the  whole  or  any  part  of  the  cargo  of  the  ship,  or 
incur  expenses  for  such  purpose.^ 

Thus  goods  or  parts  of  the  ship  may  be  cast  away  to  save 
the  ship  from  foundering  in  a  storm,  or  to  float  her  when 
stranded,  or  to  facilitate  her  escape  from  an  enemy. 

Throwing  property  overboard  for  such  purpose  is  calledj[et- 
tison ;  and  the  loss  caused  thereby,  or  by  any  other  sacrifice  or 
expense  voluntarily  made  for  such  a  purpose,  is  called  a  general 
average  loss,  and  is  the  subject  of  general  average  contribution 
by  the  interests  (whether  ship,  cargo,  or  freight)  which  are 
thereby  saved. ^ 

If  the  jettison  is  successful  at  the  time,  and  the  ship  continues 
on  her  course  but  is  afterward  wrecked,  whatever  is  saved  from 
the  Avreck  must  contribute  to  the  original  jettison  ;  but  if  the 
goods  jettisoned  be  afterward  recovered,  and  the  ship  proceed- 
ing on  her  course  be  afterward  lost,  the  goods  need  not  con- 
tribute toward  the  loss  of  the  ship. 

In  the  case  of  general  average  expenses  properly  incurred 
under  the  circumstances  as  then  existing,  it  has  been  said  tlint 
the  ratable  contribution  is  due  from  the  different  interests 
intended  to  be  benefited,  whether  the  experiment  is  itself  the 
cause  of  the  benefit  or  not ;  and  on  principle  it  would  seem  as 
though  this  were  the  better  rule  to  apply  to  all  such  justifiaMo 
sacrifices  made  for  the  common  benefit.'' 

A  jettison  must  be  made  in  good  faith  and  with  prudence, 
and  ought,  so  far  as  possible,  to  begin  with  the  most  bulky  ami 
least  valuable  articles.  But  of  necessity  the  master  of  the  shi[) 
must  be  left  free  to  take  such  steps  as  he  deems  necessary  for 
the  preservation  of  the  interests  intrusted  to  his  care. 

'  Sweeney  v.  Thompson,  30  Fed.  R.  s.  c,   86   Am.  Dec.    375.     Scudder  v. 

121.     Hobson  v.  Lord,  93  U.  S.  397.  Bradford,  14  Pick.  13  ;  s.  c,  25  Am. 

■  Star  of  Hope.  9  Wall.  203.  Dec.  355. 

»  Harris  v.  Moody,  30  N.  Y.,  866  ;       *  Spofford  v.  Dodge,  14  Mass.  6ft. 


§  120  Generai-  Average,  123 

In  early  times  the  pei'formance  of  a  general  average  act  was 
usuall}''  preceded  by  a  consultation  between  the  master  and  the 
merchants,  who  frequently  accompanied  their  wares  upon  the 
voyage,  with  respect  to  tlie  necessity  for  an  extraordinary  sacri- 
fice for  the  common  safety,  and  the  best  means  of  attaining 
that  end.  Althoug-h  such  a  conference  has  long  since  been  dis- 
continued  in  practice,  there  is  a  sense  in  which  it  is  still  held  in 
theory,  inasmuch  as  the  master  becomes  agent  for  the  owner 
of  the  cargo  as  well  as  for  the  ship-owner  in  times  of  emer- 
gency, with  authority  to  bind  both  parties  in  the  adoption  of 
such  measures  as  are  expedient  in  the  common  interest.^ 

The  general  average  act,  then,  must  be  judicious.  Its  start- 
ing point  is  danger,  and  its  objective  point  is  safety. 

If  the  master  is  disabled,  whoever  is  in  active  command  of 
the  ship  may,  in  case  of  necessity,  make  the  jettison  or  other 
sacrifice.^ 

It  is  one  of  the  commonly  accepted  rules  in  the  law  of  gen- 
eral average,  that  the  party  whose  negligence  has  made  the  sac- 
rifice necessary  cannot  claim  contribution  in  general  average.^ 

§  130.  Sacrifices  Enumerated. — The  sacrifices  recov- 
erable under  the  principles  above  stated  include  the  following : 
The  cutting  away  of  masts,  spars,  or  sails  to  right  a  vessel 
which  is  on  her  beam  ends  or  to  rescue  her  from  other  immi- 
nent peril ;  *  the  shipping  of  her  anchors  and  chains  to  avoid 
stranding  or  collision  ;  the  breakinof  of  bulwarks  to  relieve  the 
vessel  of  water  which  floods  her  decks  ;  the  jettison  of  cargo 
materials  or  stores  for  the  common  safety ;  the  extraordinary 
use  of  materials  and  stores  in  moving  a  stranded  ship  off  the 
ground,  such  as  the  setting  of  the  sails  for  that  purpose  in  case 
of  a  sailing  vessel,  the  breaking  of  the  engines  in  the  case  of  a 
steamer,  or  the  use  of  anchors,  chains,  bolts,  hawsers,  etc.,  in 
either  case ;  the  scuttling  of  a  vessel  for  the  purpose  of  admit- 
ting water  to  extinguish  a  fire ;  ^  the  use  at  sea  of  spare  spars, 
sails,  ropes,  or  other  materials  and  stores  for  the  purpose  of 

'  Gratitudine,    3    Chas.    Robinson.         '  Robinson  t.  Price,  L.  R.,2  Q.  B. 

240.  D.  91.     The  Parana,   L.  R.,  1  Prob. 

»Ralli   V.  Troop,  87  Fed.  Rep.,  p.  Div.  453      Portsmouth,  9  ^'\'all.  682 
888.     Lawrence  v.  Minturn,  17  How.         ■*  Margareta  Blanca,  14  F.  R.  59. 
UO.     Price  v.  Noble,  4  Taunt.  123.  '  Ralli  v.  Troop,  37  F.  R.  886. 


124  Insurance:   Fire,  Life,  Marine.  §  121 

stopping  a  leak,  rigging  jury  masts,  fishing  sprung  masts, 
or  for  any  other  purpose  where  the  common  safety  appears 
to  necessitate  the  sacrifice ;  the  sale  of  ship  or  cargo  or  part 
thereof,^  and  in  the  United  States  the  jettison  of  deck  load 
when  its  stowage  on  deck  is  warranted  by  custom  ;  ^  and  also 
damage  from  voluntary  stranding  of  the  ship,  and  repairs  there- 
by necessitated.^ 

The  principal  sacrifices  of  cargo  other  than  jettison  and  its 
consequences  which  come  into  general  average  are  as  follows : 
Any  loss  or  damage  which  cargo  may  suffer  through  being  dis- 
charged on  to  the  shore,  dragged  through  the  surf,  landed  in 
rafts,  placed  in  lighters,  put  on  muddy  ground,  or  otherwise 
treated  in  an  unusual  way  to  float  a  stranded  ship ;  •*  but  when 
goods  once  reach  a  place  of  safety,  they  cease  thereafter, 
according  to  the  English  rule,  to  be  at  the  risk  of  the  general 
interest.*^ 

Any  loss  or  damage  to  cargo  necessarily  arising  from  a 
forced  discharge  when  the  cost  of  the  discharge  is  allowed  in 
genera]  average  is  itself  allowable.^ 

Any  loss  or  damage  to  the  cargo,  whether  suffered  by  water 
on  board,  or  otherwise  admitted  into  the  ship's  hold  to  ex- 
tinguish a  fire. 

Any  loss  or  damage  to  cargo  caused  by  water  entering  the 
ship's  hold  through  holes  made  by  the  fall  of  a  mast  cut  away 
for  the  common  safety,  provided  such  loss  or  damage  was  the 
proximate  result  of  the  cutting  away.' 

The  loss  of  cargo  consumed  as  fuel  to  work  a  steamer's 
engines  or  a  donkey  engine  in  time  of  peril,  provided  the 
supply  of  fuel  was  originally  sufficient.  Passengers'  baggage, 
though  itself  not  liable  to  contribute.^ 

§  131.  Deck  Load. — In  the  United  States  and  England, 
in  the  absence  of  an  express  prohibition   in  the  policy,  the 

'  Nelson  v.  Belmont,  5  Duer,  310.  '  Gregory    v.    Orrall,  8    Fed.  Rep. 

»  Taunton  Co.  v.  Ins.  Co.,  22  Pick.  287, 

108.  '  Maggrath  v.  Church,  1  Caines  R. 

•N.  W.  Transfer  Co.  v.  Cont.  Co.,  196.      Saltus  v.   Ocean   Ins.    Co.,    14 

24  Fed.  Rep.  171.  Johns.  188. 

*  Lewis  V.  Williams,  1  Hall,  430.  '  Heye  v.  North  German  Lloyd,  83 

•  Svendson  v.  Wallace,  10  App.  Cas.  Fed.  Rep.  60. 
404. 


§123  General  Average.  135 

courts  allow  a  jettison  of  deck  load  to  be  included  in  general 
average,  provided  a  custom  of  the  trade  can  be  shown  justi- 
fying the  loading  of  the  goods  on  deck.'  But,  if  no  such 
custom  is  proved,  a  claim  for  jettison  of  deck  load  cannot  be 
allowed  in  general  average,^  although  if  a  deck  load  is  saved 
by  a  general  average  act,  it  must  itself  contribute.  There 
must  be  an  actual  intention  to  throw  the  deck  cargo  overboard 
in  order  to  constitute  a  general  average  act.^ 

§  133.  Voluntary  Stranding. — In  the  United  States 
the  voluntary  stranding  of  a  ship  when  in  peril  is  held  to  be  a 
general  average  act,  and  that  irrespective  of  the  question 
whether  the  vessel  ultimately  becomes  a  total  wreck  or  not.* 
But  general  average  is  not  allowed  in  favor  of  the  ship-owner 
if  „the  voluntary  stranding  was  made  necessary  by  negligent 
navigation  of  the  ship.^  A  voluntary  stranding  is  not  allowed 
as  a  general  average  act  by  English  practice  in  the  absence  of 
express  agreement,  and  the  rule  there  is  said  to  be  defended 
mainly  upon  two  grounds :  (1)  that  the  stranding  is  not  a 
sacrifice  at  all,  nor  the  result  of  any  selective  discrimination 
between  different  interests,  but  on  the  contrary  is  an  attempt 
to  put  both  ship  and  cargo  into  a  situation  of  less  peril ;  and 
(2)  that  in  practice  it  is  impossible  to  distinguish  between  i 
damages  received  by  the  ship  and  cargo  prior  to  stranding,  I 
which  are  admittedly  particular  and  not  general  average,  and 
losses  sustained  after  or  in  consequence  of  stranding,  which  it  is 
claimed  should  come  into  g-eneral  averaofe. 

The  York  Antwerp  rules,  it  will  be  noticed,  on  this  as  on 
some  other  points,  have  struck  a  compromise  between  conflict- 
ing views. 

§  133.  Port  of  Refuge,  and  other  Expenses. — The 

most  frequent  cause  of  general  average  expenses  occurs  where 
a  vessel  in  peril  puts  into  a  port  of  refuge  for  repairs  to  enable 

1  Harris  v.   Moody,  30  N.  Y.  266  ;  *  Barnard  v.  Adams,  10  How.  270. 

8.  c,    86   Am.    Dec.   375.      Wood   v.  Columbian    Ins.     Co.    v.    Ashby,    13 

Phoenix  Ins.  Co.,  8  Fed.  R.  27.  Peters,  381.     Fowler  v.  Rathbones,  12 

■'  The  Milwaukee  Belle,  2  Biss.  197.  Wall.  102.     Star  of  Hope,  9  Wall.  20-1 

'The  Adele  Thackera,  24  Fed.  R.  Emery  v.  Huntington,  109  Mass.  481. 

809.  *  Snow  V.  Perkins,  39  Fed.  R.  384. 


126  Insurance  :    Fire,  Life,  Marine.  §  124 

her  to  continue  the  voyage.  The  general  average  practice  in 
such  a  case  in  the  United  States  differs  in  some  particulars 
from  the  rules  prevailing  in  England.^ 

By  the  law  of  this  country,  wages  and  provisions  of  the 
crew  are  allowed,  in  general  average,  from  the  time  of  deviat- 
ing from  the  voyage  for  the  purpose  of  putting  into  a  port  of 
refuge,  until  the  voyage  is  resumed,  or  until  the  cargo  and 
vessel  are  separated,  or  until  there  is  no  longer  a  reasonable 
prospect  that  the  voyage  will  be  continued.^ 

The  expenses  of  entering  the  port,  and  of  unloading,  ware- 
housing, and  reloading  the  cargo,  are  allowable,  provided  the 
voyage  is  resumed,  or  so  long  as  there  is  a  fair  prospect  of  its 
continuance.^ 

Before  dealing  with  the  cargo,  however,  in  a  port  of  refuge, 
the  master  is  bound  to  communicate  with  its  owners  if  it  is 
possible,  in  order  to  take  their  instructions  "^ 

Goods  or  money  paid  for  ransom  or  salvage,  or  for  other 

services  rendered  for  the  common  benefit,  are  also  allowed  in 

(general  average.     But  if  the  expense  is  not  incurred  for  the 

/common  safety,  then  it  is  chargeable,  in  particular  average, 

I  to  that  interest  which  it  was  intended  to  benefit.^ 

§  124.  The  Adjustment. — The  proportions  in  which  a 
general  average  loss  is  to  be  borne  must  be  ascertained  by  an 
adjustment,  in  which  the  owner  of  each  separate  interest  is  to 
be  charged  with  such  proportion  of  the  value  of  the  things 
lost  as  the  value  of  his  part  of  the  property  affected  bears  to 
the  value  of  the  whole.^ 

An  adjustment  made  at  the  end  of  the  voyage,  if  valid 
there,  is  valid  anywhere.  The  first  port  reached  subsequent  to 
the  general  average  act,  where  any  or  all  the  interests  are  sep- 
arated, may  be  the  end  of  the  voyage  for  this  purpose.''' 

'  Svendsen  v.  Wallace,  10  App.  Cas.  McAndrews  v.  Thatcher,  3  Wall.  347. 

404.  McGraw   v.    Ocean  Ins.  Co.,  23  Piek. 

'^  Hobson    V.    Lord,    92   U.   S.   397.  405.     Ocean  St.  C.  Co.  v.  Anderson, 

The  Star  of  Hope.  9  Wall.  80;;.  13  Q.  B.  D.  651. 

'  The  Joseph  Farwell,  31  Fed.  Rep.  ^  Wheaton  v.  China  Mut.  Ins.  Co., 

844.  39  Fed.  Rep.  879. 

'  The     Julia     Blake,     107     U.      S.  '  Barnard  v.   Adams,  10    How.  270. 

4ls.  Bradley  v    i  argo  of  Lumber,  29  Fed 

'  Douglas   V.    Moody,  \)   Mass.   548.  Rep.  G48. 


§  125  General  Average.  127 

Inasmuch  as  a  lien  exists  upon  the  cargo  in  favor  of  the 
ship  to  secure  general  average  contribution,  it  is  customary  for 
the  consignees  of  the  cargo,  in  order  to  secure  an  immediate 
delivery  of  their  cargo,  to  give  an  undei'taking  or  to  make  a 
deposit  to  cover  any  amount  for  which  they  may  be  ultimately 
liable  in  general  average. 

The  I'ules  of  practice  for  the  adjustment  of  general  average 
losses  vary  greatly  in  detail  in  different  countries  and  in  differ- 
ent ports.  The  regulations  most  frequently  used  by  agree- 
ment are  the  York  Antwerp  rules,  adopted  by  the  Association 
for  the  Reform  and  Codification  of  the  Law  of  Nations,  at 
Antwerp,  in  1877,  and  amended  at  their  Liverpool  conference 
in  1890.     These  as  amended  are  as  follows : 

§  135.  York  Antwerp  Rules. 

Rule  I.  Jettison  of  Deck  Cargo. — No  jettison  of  deck 
cargo  shall  be  made  good  as  general  average. 

Every  structure  not  built  in  with  the  frame  of  the  vessel 
shall  be  considered  to  be  a  part  of  the  deck  of  the  vessel. 

Rule  II.  Damage  by  Jettison  and  Sacrifice  for  the 
Common  Safety.— Damage  done  to  a  ship  and  cargo,  or  either 
of  them,  by  or  in  consequence  of  a  sacrifice  made  for  the  com- 
mon safety,  and  by  water  which  goes  down  a  ship's  hatches 
opened  or  other  opening  made  for  the  purpose  of  making  a 
jettison  for  the  common  safety,  shall  be  made  good  as  general 
average. 

R^de  III.  Extinguishing  Fire  on  Shipboard. — Damage 
done  to  a  ship  and  cargo,  or  either  of  them,  by  water  or  other- 
wise, including  damage  by  beaching  or  scuttling  a  burning  ship, 
in  extinguishing  a  fire  on  board  the  ship,  shall  be  made  good 
as  general  average  ;  except  that  no  compensation  shall  be  made 
for  damage  to  such  portions  of  the  ship  and  bulk  cargo,  or  to 
such  separate  packages  of  cargo,  as  have  been  on  fire. 

Rule  IV.  Cutting  away  Wreck. — Loss  or  damage  caused 
b}^  cutting  away  the  wreck  or  remains  of  spars,  or  of  other 
things  which  have  previously  been  carried  away  by  sea-peril, 
shall  not  be  made  good  as  general  average. 

Rrde  V.  Voluntary  Stranding. — When  a  ship  is  inten- 
tionally run  on  shore,  and  the  circumstances  are  such  that  if 
that  course  were  not  adopted  she  would  inevitably  sink,  oi- 


128  Insurance  :    Fire,  Life,  Marine.  §  126 

drive  on  shore  or  on  rocks,  no  loss  or  damage  caused  to  the 
ship,  cargo,  and  freight,  or  any  of  them,  by  such  intentional 
running  on  shore  shall  be  made  good  as  general  average.  But 
in  all  other  cases  where  a  ship  is  intentionally  run  on  shore  for 
the  common  safety,  the  consequent  loss  or  damage  shall  be 
allowed  as  general  average. 

Rule  VI.  Carrying  Press  of  Sail;  Damage  to  or  Loss 
OF  Sails. — Damage  to  or  loss  of  sails  and  spars,  or  either  of 
them,  caused  by  forcing  a  ship  off  the  ground  or  by  driving 
her  higher  up  the  ground,  for  the  common  safety,  shall  be 
made  good  as  general  average ;  but  where  a  ship  is  afloat,  no 
loss  or  damage  caused  to  the  ship,  cargo,  and  freight,  or  any 
of  them,  by  carrying  a  press  of  sail,  shall  be  made  good  as 
general  average. 

Rule  VII.  Damage  to  Engines  in  Refloating  a  Ship. — 
Damage  caused  to  machinery  and  boilers  of  a  ship,  which  is 
ashore  and  in  a  position  of  peril,  in  endeavoring  to  refloat,  shall 
be  allowed  in  general  average,  when  shown  to  have  arisen  from 
an  actual  intention  to  float  the  ship  for  the  common  safety  at 
the  risk  of  such  damage. 

Rule  VIII.  Expenses  Lightening  a  Ship  when  Ashore, 
AND  Consequent  Damage. — When  a  ship  is  ashore  and,  in 
order  to  float  her,  cargo,  bunker  coals,  and  ship's  stores,  or  any 
of  them,  are  discharged,  the  extra  cost  of  lightening,  ligiiter 
hire,  and  reshipping  (if  incurred),  and  the  loss  or  damage  sus- 
tained thereby,  shall  be  admitted  as  general  average. 

Rule  IX.  Cargo,  Ship's  Materials,  and  Stores  Burnt 
FOR  Fuel. — Cargo,  ship's  materials,  and  stores,  or  any  of  them, 
necessarily  burnt  for  fuel  for  the  common  safety  at  a  time  of 
peril,  shall  be  admitted  as  general  average,  when  and  only 
when  an  ample  supply  of  fuel  had  been  provided ;  but  the 
estimated  quantity  of  coals  that  would  have  been  consumed, 
calculated  at  the  price  current  at  the  ship's  last  port  of  de- 
parture at  the  date  of  her  leaving,  shall  be  charged  to  the  ship- 
owner and  credited  to  the  general  average. 

Rule  X.  Expenses  at  Port  of  Refuge,  etc. — (a)  When 
a  ship  shall  have  entered  a  port  or  place  of  refuge,  or  shall 
have  returned  to  her  port  or  place  of  loading,  in  consequence 
of  accident,  sacrifice,  or  other  extraordinary  circumstances, 
which  render  that  necessary  for  the  common  safety,  the  ex- 


§  125  General  Average.  129 

penses  of  entering  such  port  or  place  shall  be  admitted  as 
general  average  ;  and  when  she  shall  have  sailed  thence  with 
her  original  cargo,  or  a  part  of  it,  tlie  corresponding  expenses 
of  leaving  such  port  or  place,  consequent  upon  such  entry  or 
return,  shall  likewise  be  admitted  as  general  average. 

(h)  The  cost  of  discharging  cargo  from  a  ship,  whether  at 
a  port  or  place  of  loading,  call,  or  refuge,  shall  be  admitted  as 
general  average,  when  the  discharge  was  necessary  for  the 
common  safety  or  to  enable  damage  to  the  ship,  caused  by 
sacrifice  or  accident  during  the  voyage,  to  be  repaired,  if  the 
repairs  were  necessarj''  for  the  safe  prosecution  of  the  voyage. 

(c)  "Whenever  the  cost  of  discharging  cargo  from  a  ship 
is  admissible  as  general  average,  the  cost  of  reloading  and  stor- 
ing such  cargo  on  board  the  said  ship,  together  with  all  storage 
charges  on  such  cargo,  shall  likewise  be  so  admitted.  But 
when  the  ship  is  condemned  or  does  not  proceed  on  her  original 
vo\^age,  no  stoi'age  expenses  incurred  after  the  date  of  the 
ship's  condemnation  or  of  the  abandonment  of  the  voyage 
shall  be  admitted  as  general  average. 

(d)  If  a  ship  under  average  be  in  a  port  or  place  at  which 
it  is  practicable  to  repair  her,  so  as  to  enable  her  to  carry  on 
the  whole  cargo,  and  if,  in  order  to  save  expenses,  either  she  is 
towed  thence  to  some  other  port  or  place  of  repair  or  to  her 
destination,  or  the  cargo  or  a  portion  of  it  is  transhipped  by 
another  ship,  or  otherwise  forwarded,  then  the  extra  cost  of 
such  towage,  transhipment,  and  forwarding,  or  any  of  them 
(up  to  the  amount  of  the  extra  expense  saved),  shall  be  payable 
by  the  several  parties  to  the  adventure  in  proportion  to  the 
extraordinary  expense  saved. 

Eule  XI.  Wages  and  Maintenance  of  Crew  in  Port 
OF  Refuge,  etc. — When  a  ship  shall  have  entered  or  been  de- 
tained in  any  port  or  place  under  the  circumstances,  or  for  the 
purposes  of  the  repairs,  mentioned  in  Rule  VII.,  the  wages  pay- 
able to  the  master,  officers,  and  crew,  together  with  the  cost 
of  maintenance  of  the  same,  during  the  extra  period  of  deten- 
tion in  such  port  or  place  until  the  ship  shall  or  should  have 
been  made  ready  to  proceed  upon  her  voyage,  shall  be  admitted 
as  general  average.  But  when  the  ship  is  condemned  or  does 
not  proceed  on  her  original  voyage,  the  wages  and  maintenance 
of  the  master,  officers,  and  crew,  incurred  after  the  date  of 
9 


130 


Insurance:    Fikk,  Life,  Marine. 


125 


the  ship's  condemnation  or  of  tiie  abandonment  of  the  voyage, 
shall  not  be  admitted  as  general  avei'age. 

Rule  XII.  Damage  to  Cargo  in  Discharging,  etc. — 
Damage  done  to  or  loss  of  cargo  necessarily  caused  in  the  act 
of  discharging,  storing,  reloading,  and  stowing,  shall  be  made 
good  as  general  average,  when  and  only  when  the  cost  of  those 
measures  respectively  is  admitted  as  general  average. 

Rule  XIII.  Deductions  from  Cost  of  Repairs. — In  ad- 
justing claims  for  general  average,  repairs  to  be  allowed  in 
general  average  shall  be  subject  to  the  following  deductions  in 
respect  of  "  new  for  old,"  viz.  : 

In  the  case  of  iron  or  steel  ships,  from  date  of  original 
register  to  the  date  of  accident, — 

Up  to         r      All   repairs   to   be   allowed   in   full,  except 
1  year  old     \  painting  or  coating  of  bottom,  from  which  one- 
(A).  I  third  is  to  be  deducted. 

One-third  to  be  deducted  off  repairs  to  and 
renewal  of  wood- work  of  hull,  masts  and 
spars,  furniture,    upholstery,   crockery,   metal 


Between 
1  and  8  years " 

(B). 


rigging,     ropes, 


and    glassware,    also     sails, 

sheets,    and    hawsers   (other   than    wire   and 

chain),  awnings,  covers,  and  painting. 

One-sixth  to  be  deducted  off  wire  rigging, 

wire   ropes   and    wire    hawsers,    chain   cables 

and   chains,    donkey    engines,    steam  winches 

and   connections,    steam    cranes  and   connec- 

^  tions ;  other  repairs  in  full. 

Deductions  as  above  under  Clause  B,  except 
that  one-sixth    be   deducted  off    iron-work  of 
masts  and  spars,  and  machinery  (inclusive  of 
boilers  and  their  mountings). 
r     Deductions  as  above  under  Clause  C,  except 
Between  that  one-third   be  deducted  off   iron-work   of 

6  and  10  years  i  masts  and  spars,  repairs  to  and  renewal  of  all 
machinery  (inclusive  of  boilers  and  their  mount- 
ings), and  all  hawsers,  ropes,  sheets,  and  rigging. 

One-third  to  be  deducted  off  all  repairs  and 
renewals,  except  iron- work  of  hull  and  cement- 
ing and  chain  cables,  from  which  one-sixth  to 
be  deducted.     Anchors  to  be  allowed  in  full. 


Between 
3  and  6  years 

(C). 


(D). 

Between 
10  &  15  years 

(E), 


§  125  Geneeal  Average.  131 

Over  /      One-third  to  be  deducted  off  all  repairs  and 

15  years      -|  renewals.     Anchors  to  be  allowed  in  full.    One- 
(F).  (  sixth  to  be  deducted  off  chain  cables. 

The  deductions  (except  as  to  provisions  and 
stores,  machinery,  and  boilers)  to  be  regulated 
by  the  age  of  the  ship,  and  not  the  age  of  the 
particular  part  of  her  to   which  they  apply. 
Generally        ^o  painting  bottom  to  be  allowed  if  the  bottom 
(Q\  I  has  not  been  painted  within  six  months  previ- 

ous to  the  date  of  accident.  No  deduction  to 
be  made  in  respect  of  old  material  which  is  re- 
paired without  being  replaced  by  new,  and  pro- 
visions and  stores  which  have  not  been  in  use. 

In  the  case  of  wooden  or  composite  ships  : 

When  a  ship  is  under  one  year  old  from  date  of  original 
register,  at  the  time  of  accident,  no  deduction  new  for 
old  shall  be  made.  After  that  period  a  deduction  of 
one-third  shall  be  made,  with  the  following  exceptions  : 
Anchors  shall  be  allowed  in  full.  Chain  cables  shall  be  sub- 
ject to  a  deduction  of  one-sixth  only. 
No  deduction  shall  be  made  in  respect  of  provisions  and  stores 

which  had  not  been  in  use. 
Metal  sheathine:  shall  be  dealt  with,  bv  allowing  in  full  the 
cost  of  a  weight  equal  to  the  gross  weight  of  metal 
sheathing  stripped  off,  minus  the  proceeds  of  the  old 
metal.  Nails,  felt,  and  labor  metaling  are  subject  to  a 
deduction  of  one-third. 
In  the  case  of  ships  generally : 

In  the  case  of  all  ships,  the  expense  of  straightening  bent 
iron-work,  including  labor  of  taking  out  and  replacing 
it,  shall  be  allowed  in  full. 
Graving  dock  dues,  including  expenses  of  removals,  cartages, 
use  of  shears,  stages,  and  graving  dock  materials,  shall 
be  allowed  in  full. 
Itule  XIV.    Temporary   Repairs. — No   deductions   "  new 
for  old  "  shall  be  made  from  the  cost  of  temporary  repairs  of 
damage  allowable  as  general  average. 

Rule  XV.  Loss  of  Freight — Loss  of  freight  arising  from 
damage  to  or  loss  of  cargo  shall  be  made  good  as  general 


132  Insurance  :    Fire,   Life,  Marine.  §  126 

average,  either  when  caused  by  a  general  average  act,  or  when 
the  damage  to  or  loss  of  cargo  is  so  made  good. 

Rule  XV r.  Amount  to  be  made  Good  for  Cargo  Lost 
OR  Damaged  by  Sacrifice. — The  amount  to  be  made  good  as 
general  average  for  damage  or  loss  of  goods  sacrificed  shall  be 
the  loss  which  the  owner  of  the  goods  has  sustained  thereby, 
based  on  the  market  values  at  the  date  of  the  arrival  of  the 
vessel  or  at  the  termination  of  the  adventure. 

Rule  XVII.  Contributory  Values. — The  contribution  to 
a  general  average  shall  be  made  upon  the  ^ctual  values  of 
the  property  at  the  termination  of  the  adventure,  to  which 
shall  be  added  the  amount  made  good  as  general  average  for 
property  sacrificed ;  deduction  being  made  from  the  ship- 
owner's freight  and  passage-money  at  risk,  of  such  port  charges 
and  crew's  wages  as  would  not  have  been  incurred  had  the 
ship  and  cargo  been  totally  lost  at  the  date  of  the  general 
average  act  or  sacrifice,  and  have  not  been  allowed  as  general 
average  ;  deduction  being  also  made  from  the  value  of  the 
property  of  all  charges  incurred  in  respect  thereof  subsequently 
to  the  general  average  act,  except  such  charges  as  are  allowed 
in  general  average. 

Passengers'  luggage  and  personal  effects,  not  shipped  under 
bill  of  lading,  shall  not  contribute  to  general  average. 

Rule  XV HI.  Adjustment.- — Except  as  provided  in  the  fore- 
going rules,  the  adjustment  shall  be  drawn  up  in  accordance 
with  the  law  and  practice  that  would  have  governed  the  ad- 
justment had  the  contract  of  affreightment  not  contained  a 
clause  to  pay  general  average  according  to  these  rules. 

§  136.  Contributory   Value   of   Freight. — As    has 

been  observed,  the  law  prevailing  in  the  United  States  does  not 
conform  in  all  respects  to  these  rules. 

In  respect  to  the  contributory  value  of  the  freight  interest, 
which  cannot  always  be  easily  ascertained,  an  arbitrary  rule  has 
been  adopted  in  New  York.  While  the  full  amount  of  freight 
is  contributed  for  in  general  average,  only  fift}'^  per  cent,  of 
that  amount  is  called  upon  for  contribution.^  That  is  supposed 
to  be  a  rough  estimate  of  its  net  value  nt  the  end  of  the  voyage, 
after  expenses  have  been  deducted  from  the  gross  freight. 

■  Rathbone  v.  Fowler,  6  Blatch.  296. 

D 


CHAPTER   XL 

THE    NEW    YORK    STANDARD    FIRE    POLICY. 

The  dissimilarities  existing  in  numerous  forms  of  fire  poli- 
cies resulted  in  inconveniences  and  uncertainties,  especially  in 
cases  where  the  same  property  was  insured  by  policies  in  differ- 
ent companies,  which  often  thus  furnished  inconsistent  pro- 
visions for  the  adjustment  of  the  same  loss.  This  and  other 
considerations  influenced  the  legislatures  of  certain  States  to 
pass  statutes  for  the  adoption  of  standard  forms  of  fire  policies. 
A  list  of  references  to  these  statutes  will  be  found  in  the 
appendix.  The  actual  framing  and  adoption  of  the  standard 
]wlicy  by  the  several  States  was  sometimes  separated  by  a  con- 
siderable interval  of  time  from  the  enactment  making  provision 
for  its  adoption. 

In  framing  a  standard  form  of  fire  policy  Massachusetts 
was  the  pioneer  State.  Under  the  act  of  1886,  Chapter  488, 
passed  prior  to  the  Massachusetts  act.  New  York  followed  with 
the  preparation  of  a  standard  form  differing  in  many  particulars 
from  that  previously  drafted  by  the  Massachusetts  authorities. 
The  other  States  mentioned  in  the  list  already  referred  to  have 
accepted  either  substantially  or  precisely  the  New  York  stand- 
ard form."  This  was  drafted  under  the  provisions  of  the  New 
York  statute  ostensibly  by  a  committee  of  the  New  York  Board 
of  Fire  Underwriters,  but  actually  by  that  committee  in  con- 
ference with  a  committee  of  the  National  Board  of  Fire  Un- 
derwriters, and  all  that  legal  knowledge  and  business  experience 
could  furnish  was  brought  to  bear  upon  the  careful  construc- 
tion of  this  important  instrument.^  The  aim,  among  other 
things,  was  to  avoid  giving  occasion  for  novel  questions  of  con- 
troversy by  making  it  accord  in  its  phraseology  with  the 
decisions  of  the  court  of  last  resort  in  this  State. 

'  The   work  was   superintended   by  William    Allen   Butler,    Esq.,   of  the 
New  York  bar.  "  Except  New  Plampshire, 


134  Insurance:    Fire,  Life,  Marine.  §127 

^  V/\  The  use  of  the  standard  form  is  made  by  the  statute  obliga- 
■"->  tory  in  New  York  upon  all  fire  companies  doing  business  within 
the  State,  and  a  penalty  is  imposed  for  violating  the  act,  but  it 
/ois  provitled  that  any  policy  in  form  inconsistent  with  the  pro- 
/  -^visions  of  the  act  shall  nevertheless  be  binding  upon  the  com- 
V       pany  issuing  the  same. 

It  is  hardly  necessary  to  remark  that  the  policy  is  not  an 
absolute  agreement  to  grant  indemnity  to  the  insured  at  ali 
events  for  the  loss  occasioned  by  the  casualty  insured  against, 
ijut  is  made  dependent  upon  the  fulfilment  on  his  part  of  cer- 
tain provisions  of  the  contract  which  are  called  conditions.  If 
any  one  of  these  is  violated  or  unperformed,  the  policy  is 
avoided,  and  there  can  bo  no  recovery  unless  the  policy  is  sub- 
sequentl}'  confirmed  by  the  insurer.  The  conditions  for  the 
most  part  are  expressed  in  the  contract  itself,  and  to  solve  their 
proper  meaning,  force,  and  effect  must  be  the  chief  concern  in 
the  study  of  fire-insurance  law.  An  inspection  of  the  New 
Fork  standard  policy,  given  in  the  appendix,  will  show  that 
some  of  its  conditions  are  precedent  to  the  effectual  making  of 
the  contract ;  others  pre-suppose  the  contract  made,  but  are 
precedent  to  a  right  of  action  thereon.  Others  declare  events 
in  which  all  right  under  the  contract  is  forfeited,  or  otherwise 
define  the  obligations  of  the  parties,  or  restrict  the  liability  of 
the  insurers.  Others  deal  with  the  mode  of  settling  disputes, 
and  others  limit  the  period  for  bringing  suit.  The  conditions 
may  also  be  divided  into  three  classes ;  those  precedent  to  a 
Talid  inception  of  the  contract,  those  relating  to  the  contract 
during  the  pendency  of  the  risk,  and  those  which  appertain  to 
the  presentation  of  the  claim  of  the  assured  and  the  proofs  of 
his  loss.  Before  the  standard  policy  was  adopted,  much  com- 
plaint was  made  regarding  the  fine-print  conditions  ordinarily 
inserted  in  a  fire  policy.  The  chief  justice  of  the  New  Hamp- 
shire court  made  the  character  of  these  conditions  the  subject 
of  a  forcible  but  unjudicial  tirade  against  insurance  companies 
generally.^  We  shall  examine  the  clauses  of  the  New  York 
standard  policy  in  the  order  in  which  they  occur  in  the  policy. 

§  137.  In  Consideration  of  the  Stipulations  and 
Premium. — The  insurei-  is  entitled  to  payment  of  premium 
>  De  Laney  v.  Ins.  Co.,  53  N.  H.  681. 


§  128  Standard  Fire  Policy  :    Loss  by  Fire.  135 

upon  the  inception  of  the  risk  or  closing  of  tlie  contract  unless     ^^r> 
otherwise  agreed,  but  ordinarily  the  payment  of  the  premium  '-  ^ 

is  not  made  a  condition  of  the  policy,  nor  is  its  non-payment  - 

made  a  ground  of  forfeiture.     It  is  generally  paid  in  cash  or  "^ 
check,  but  may  be  paid  by  notes  or  credit.     Premium  notes  in 
mutual  companies  are  generally  made  a  lien  upon  the  property 
insured.^    If  the  risk  attaches,  the  premium  is  not  returnable  ex-     ~^^ 
cept  as  provided  by  the  terms  of  the  agreement  or  by  statute. 
If  the  contract  is  rescinded,  the  premium  is  returnable;^  but  if  ""^^ 
void  for  fraud  it  is  not  returnable.^  O* 

§  128.  Insures  against  all  Direct  Loss  by  Fire. — 

Loss  by  fire  means  the  result  of  the  ignition  of  the  property 
insured  or  some  substance  near  to  it.     For  example,  where 
sugar  was  spoiled  by  great  heat  from  a  fire  in  ordinary  use  be- 
cause of  the  closing  of  a  register,  the  company  was  held  not^ 
liable,  and  so  also  where  the  heat  of  the  sun  contracted  timber    o- 
withoutany  actual  fire  ;*  and  similarly  where  the  interior  of  a         'X) 
boiler  was  damaged  by  overheating  from  regular  furnace  fires 
owing  to  absence  of  water  in  the  boiler;^  but  the  proximate 
results  of  fire  within  the  rule  of  law  establishing  the  liability  of 
the  insurer  may  include  other  things  than  combustion  ;  as,  for 
example,  injuries  to  the  insured  property  by  water  from  the 
fire-engines,  or  exposure  of  goods  during  the  fire,  or  during 
their  reasonable  removal,  and  the  loss  of  goods  by  theft  dur- 
ing the  fire,   or  during  a  reasonable  removal  to  a  place  of 
safety.' 

If  a  policy  were  silent  upon  the  subject,  loss  by  fire  would 
include  loss   by  a  gunpowder   explosion,  but   not  loss  by  a  r? 
steam  explosion  or  by  the  wind^  It  would  not  include  loss  by    ^^^^^^ 

'  Woodfin   V.    Asheville  Mut.    Ins.  Atkinson  v.  Newcastle  &  G.  W.  W.              ^o 

Co.,  6  Jones'(N.  C.)  558.  Co.,  L.  R.  6  Ex.  404.    132  N.  Y.  298.               ^ 

"  Ins.  Co.  V.  Pyle,  44  Ohio  St.  IJ  ;  *  American  Towing  Co.  v.  Ger.  Fire 

8.  c,  58  Am.  Rep.  781.  Ins.  Co..  20  Ins.  L.  J.  402  (Md.  1891). 

*  Blaeser  V.  Milwaukee  Mut.  Ins.  •  Stanley  v.  Western  Ins.  Co.,  L.  R., 
Co.,  37  Wis.  31  ;  s.  c,  19  Am.  Rep.  3  Exeh.  74  ;  s.  c,  37  L.  J.  Q.  B.  73. 
747.  Eabcock  v.  Montgomery  Co.  Mut.  Ins. 

*  Babcock  v.  Montgomery  Co.  Mut.  Co.,  6  Barb.  637.  White  v.  Republic 
Ins.  Co.,  6  Barb.  637.  Austin  v.  Fire  Ins.  Co.,  57  Maine  91  ;  s c,  3 
Drewe,   6  Taunt.   436.     Scripture  v.  Am.  Rep.  22. 

Lowell  Mut.    Fire  Ins.   Co.,  04  Mass.        "  Waters    v.    Merchants'   Louisville 
(10  Cush.)  356 ;  s.  c,  67  Am.  Dec.  111.    Ins.  Co.,  11  Peters  318.    Scripture  v. 


136  Insurance:    Fire,  Life,  Marine.  §  129 

lightning  unless  ignition  resulted,  but  a  lightning  clause  may 
be  attached  to  the  policy.^ 

Fire  originating  in  spontaneous  combustion  is  within  the 
risk.  Damage  caused  by  concussion  caused  by  an  explosion 
of  gunpowder  in  another  building  is  not  within  the  risk.^  But 
the  special  provisions  of  the  contract  govern. 

The  policy  includes  loss  by  the  incendiary  act  of  the  insured 
if  insane,  and  includes  the  unintentional   or  careless  acts  of 
third    persons,   whether   his  agents   or   not,  as  well  as  their 
criminal  acts ;  but  if  the  fire  is  caused  by  the  willful  act  of  the 
insured  himself,  or  of  some  one  acting  with  his  privity  or  con- 
sent, the  insurer  will  be  exonerated.     Arson  by  the  wife  of  the 
,    insured  without  his  connivance  would  be  no  defence  to  the 
Ijf       company.** 
%  Arson  by  an  officer  of  an  insured  corporation,  unless  sorae- 

V  thing  like  a  conspiracy  could  be  shown  among  those  interested 

in  the  corporation,  would  be  no  defence  to  the  insurer,  because 
a  corporation  does  not  impliedly  authorize  its  representatives 
to  commit  a  crime.'* 

The  word  "direct"  is  not  in  the  corresponding  clause  of 
the  Massachusetts  policy. 

§  139.  The  Following  Described  Property. — The 

description  of  the  property  is  written  into  the  printed  form, 
usually  in  brief  but  comprehensive  terms.  Hence,  if  the  lan- 
guage of  the  description  leaves  it  doubtful  what  goods  or 
buildings  or  other  property  it  was  intended  to  cover,  the 
courts  construe  the  ambiguity  liberally  in  favor  of  the  insured, 
with  a  view  to  give  a  full  indemnity  for  all  that  might  reason- 
ably be  considered  included  in  the  description.  Accordingly, 
the  description  of  the  policy  covers  not  only  what  is  specifically 

Lowell  Mut  Firelns.  Co.,  10  Cash,  gomery  Co.  Mut.   Ins.   Co.,  4  N.  Y. 

"SSeTs'.T,' 67  Am"  i)ec.  111.     Brown  326. 

'v.  St.  Nicholas  Ins.  Co..  61  N.  Y.  3:32.  '■'  Everett  v.  The  London  Assurance, 

Millandon  v.  New  Orleans  Ins.  Co.,  4  19  C.  B.  N.  S.  12().    Caballerov.  Home 

La.  Ann.  15  ;  s.  c,  50  Am.  Dec.  550.  Mut.  Ins.  Co.,  15  La.  Ann.  217. 

Transatlantic  Fire  Ins.  Co.  v.  Dorsey,  '  Midland  Ins.  Co.  v.  Smith,  6  Q.  B. 

56    Md.    70  ;     s.    c,    40    Am.    Rep.  D.  568.     Karow  v.  Cont.  Ins.  Co.,  57 

403.  Wis.  56;  s.  c,  46  Am.  Rep.  17. 

'  Everett  v.  The  TiOndoii  .\ssurance,  *  Commonwealth  v.  Wachendorf,  141 

19  C.  B.  N.  S.  126.     Bubcock  v,  Mont-  Mass.  370. 


§  130  Standard  Fire  Policy  :  Location.  137 

enumerated  but  also  whatever  is  necessarily  appurtenant  to  it 
or  included  in  it.^ 

As  we  have  had  occasion  to  notice,  evidence  of  usage  is 
admissible  to  show  the  meaning  of  ambiguous  words  as 
employed  in  any  trade.  Thus,  in  an  action  upon  a  fire  policy 
described  to  cover  a  junk  dealer's  stock  of  "rags"  and  "old 
metals,"  evidence  was  admitted  to  show  that  by  trade  custom 
those  terms  had  acquired  a  broader  signification  than  belongs 
to  them  in  common  usage.^ 

A  policy  upon  merchandise  in  a  store  applies  to  the  stock 
successively  in  the  store  from  time  and  time.^ 

§  130.  Location. —  While  located  and  contained  as  de 
scribed  herein  and  not  elsewhere. 

Place  is  ordinarily  material  to  the  contract  and  of  the  very 
essence  of  the  risk,  and  a  change  of  locality  without  consent 
of  the  insurers  removes  the  goods  from  the  protection  of  the 
policy,  though  it  contain  no  special  provision  to  that  effect. 

With  varying  location  the  risk  is  apt  to  vary,  and  whether 
it  does  or  not  is  immaterial,  for  the  insurers  have  the  right  to 
know  what  risk  they  are  assuming,  and  often  decline  an  insur- 
ance because  of  the  amount  of  risk  already  placed  by  them- 
selves or  others  upon  the  same  building  or  property.* 

If  consent  to  removal  is  obtained,  goods  are  not  protected 
in  transit  unless  the  policy  so  provides,  but  are  protected  in 
the  old  place  until  removed.^ 

But  it  has  been  held  that  where  the  clause  in  the  policy  is 

'  Buchanan  v.  Exchange  Fire   Ins.  *  Lyons  v.  Providence  Washington 

Co.,  61  N  Y.  26.     Lovewell  v.  West-  Ins.  Co.,  14  R.  I.  109  ;  s.  c,  51  Am. 

Chester  Fire  Ins.  Co.,  124  Mass.  418  ;  Rep.    364.     London    and    Lancashire 

s.  c,  '-'6  Am.  Hep.  671.     Phoenix  Ins.  Ins.  Co.  v.   Lycoming  Fire  Ins.  Co., 

Co.  V.  Favorite.  49  111.  259.    Medina  v.  105  Pa.  State  424,  432.     Theobald  v. 

Builders' Mut.  Fire  Ins.  Co.  120  Mass.  Railway    Passengers'   Assur.    Co.,    10 

225.     Clarke  v.  Firemen's  Ins.  Co,,  18  Exch.    45.      Bradbury    7.    Fire    Ins. 

La.  431.     Hannan  v.   Williamsburgh  Asso.,  80  .Me.  396.     Sampson  v.  Secur- 

City  Fire  Ins.  Co.,  81  Mich.  560.  ity  Ins.  Co.,  133  Mass.  49.     Wall  v. 

«  Mooney  v.  Howard  Ins.    Co.,  138  East  River  Mut.  Ins.  Co. ,  7  N".  Y.  370. 

Mass.  375  ;  s.  c,  52  Am.  Rep.  877.  English  v.  Franklin  Fire  Ins.  Co.,  55 

^  Hooper  v.  Hudson  River  Fire  Ins.  Mich.  273  ;  s.  c,  54  Am.  Rep  377. 

Co.,   17  N.  Y.  424.     Am.   Cent.   Ins.  '  Kunzze  v.   Amer.  Exch.  Fire  Ins, 

Co.  V.  Rothchild,  82  III.  166.     Hoff-  Co.,  41  N.  Y.  412.     Sharpless  t.  Ins 

man  v.  ^tna  Ina.  Co.,  32  N.  Y.  405.  Co.,  140  Pa.  St.  437  (1891). 


138  Insurance  :    Fire,  Life,  Marine.  §  131 

simply  in  the  words,  ''the  following  described  property  con- 
tained in"  a  certain  building,  the  location  is  not  material,  if  the 
nature  of  the  property  makes  it  clear  that  it  must  have  been 
the  intention  of  the  parties  to  protect  it  by  the  policy  whether 
in  the  particular  place  or  not.  In  that  event  a  designation  of 
place  is  looked  upon  as  merely  descriptive  and  to  be  controlled 
by  the  necessary  use  of  the  thing  insured.  For  example,  where 
a  horse,  described  as  in  a  barn,  was  insured  against  fire  or 
lightning,  the  court  was  of  opinion  that  it  was  not  the  inten- 
tion of  the  parties  to  retain  the  protection  of  the  policy  only  in 
the  event  that  the  horse  was  kept  in  the  barn  all  the  time 
waiting  for  a  fire  or  a  stroke  of  lightning.^ 

Where  an  oil-tank  was  carried  away  by  a  flood  to  another 
part  of  the  tract  named  in  the  policy  and  took  fire  there,  the 
company  vs^as  heid.^  But  in  the  case  of  furniture  or  stock  de- 
scribed as  contained  in  a  certain  building,  the  designated  loca- 
tion is  without  doubt  an  essential  element  of  the  contract^ 

The  form  of  the  standard  policy  eliminates  all  ground  for 
contention. 

This  clause  is  not  a  part  of  the  Massachusetts  standard  policy. 

§  131.  Held  in  Trust. — Their  oicn,  or  heldly  them  in 
irvM  or  o?i  cominission,  or  sold  hut  not  delivered. 

Such  special  phrases  are  often  employed  to  show  that  per- 
sons holding  the  property  of  others  may  secure  the  protection 
of  the  policy  though  the  title  to  the  property  may  or  may  not 
be  in  them. 

Held  in  trust  means  simply  that  the  goods  or  property  are 
in  the  custody  of  the  insured.  The  phrase  is  not  used  in  its 
strict  technical  meaning.* 

§  1.33.  For  Whom  it  may  Concern. — These  words, 
which  are  seldom  used  in  a  fire  policy,  protect  all  those  who 

'  Haws  V.  Fire  Asso.,  114  Pa.  State  j  Lyons  y.  Proy.  Wash.  Ins^Co.,  14 

431.     Trade  Ins.  Co.  v.  Barraeliff,  45  R.  I.  109  ;  s.c,  51  Am."  Rep. ^64^    /t/^ 

N.  J.   L.  543.     Longueville  v.   West.  ^  Lucas  v.  Ins.  Co!,  23  W.  Va.  258; 

Ass.  Co.,  51  Iowa,  558  ;  s.  c,  33  Am.  s.  c,  48  Am.  Rep.  383.    Snow  v.  ('arr, 

Rep.  146    Towne  v.  Fire  Asso.,  27111.  61  Ala.  363.     Home  Ins.  Co.  v.  Balti- 

App.  433.  more  Warehouse  Co.,  93  U.    S.  527. 

*  Western,  &c.,  Pipe  Lines  v.  Home  Hough  v.  People's  Fire   Ins.  Co.,  36 

Ins.  Co.,  21  Ins.  L.  J.  24  (Penn.  1892).  Md.  398. 


§  133  Standard  Fire  Policy  :  Damages.  139 

have  any  insurable  interest  in  the  property,  but  are  held,  like 
other  general  descriptions  of  the  insured,  to  include  only  tliose 
who  are  within  tiie  contemplation  of  the  parties  at  the  time  the 
contract  was  made.  Who  these  were  may  be  shown  by  parol. ^ 
The  owners  who  wei'e  intended  to  be  covered  may  ratify 
the  insurance  and  take  the  benefit  of  it,  though  iofnorant  of  its 
existence  at  the  time  of  the  issuance  of  the  policy.^  It  has  been 
held  that  they  may  ratify  even  after  losSj|«'  If  the  insured  col-  '  %, 
lects  the  whole  amount  of  the  policy,  he  will  hold  as  trustee  <^ 
the  portion  of  the  proceeds  belonging  to  the  others.*  iT^^ 

§  1 33.  Measure  of  Damages. — Not  liable  beyond  actual 
cash  value  of  the  property  at  the  time  of  loss,  with  proper  deduc- 
i^onfor  depreciation  however  caused.  -^ 

This  in  express  terms  excludes  remote  damages,  such  as      \ 
loss  from  interruption   of  business,  prospective  rent  or  profit,  a|^ 

except  as  these  are  specificalh^  insured ;  it  also  excludes  any  ^ 

pretium  affectionis.     The  market  or  cash  value  at  the  time  of  ' 

the  fire  rules,  and  the  cost  price  is  relevant,  if  at  all,  only  as 
bearing  upon  that.* 

Experts  familiar  with  property  similar  to  that  described  or 
injured  may  testify  as  to  values.® 

And  the  difference  between  the  actual  cash  value  of  the 
property  just  before  the  fire  and  its  value  after  the  fire  is  the 
measure  of  indemnity  where  the  property  has  been  injured  and 
not  destroyed. 

If,  during  the  pendency  of  the  risk,  there  has  been  more 
than  one  loss  under  the  policy,  the  recovery  in  the  aggregate 
is  limited  to  the  face  of  the  policy. 

1  Pacific  Ins.  Co.  v.  Cattell,  4  Wend.  Selw.    485.      Protestant    Ins.    Co.    v. 

76.     Newson  v.  Douglass,  7  Bar.  &  J.  Wilson,  8  Ohio  St.  553. 

417.     See  lyy  JN.  Y.  237.  '  Waynesboro  Mut.  Fire  Ins.  Co.  v. 

**  Waring  v.  Indemnity  Ins.  Co.,  45  Creaton,  98  Pa.  St.  451;  s.  c,  42  Am. 

N.  Y.  606.  Rep.  618.     Birmingham  Fire  Ins.  Co. 

»  Herkimer  v.   Rice,   27  N.  Y.  163.  v.  Pulver,  126  lU.  329.      Snell  v.  Del- 

Bobbitt  V.  Liverpool^  &c^,  Ins.  Co.,  66  aware  Ins.  Co  ,  4  Dalla'*,  430.     Brown 

N^C.    70.  I  Hooper  v.    Robinson.    98  v.  Quincy  Ins.  Co.,  105  Mass.  396. 

"p.  S.  528.'  Fire  Ins.    Asso.    v.  Mer-  •  (lark  v.  Baird.  9  N.  Y.  183.    Teer- 

chants',    &c.,     Trans.    Co.,    66     Md.  penning  v.  Cora.  Exch.  Ins.  Co.,  43  N. 

839.  X.  ':79.     Reed  v.  Washington  F.  &  M. 

*  Hagedom  v.  Oliverson,  2  Maule  &  Ins.  Co. ,  188  Mass.  573. 


140  Insurance:    Fike,  Life,  Marine.  §  134 

In  case  the  insurer  exercises  its  option  to  rebuild  or  repair, 
the  rule  of  damages  here  defined  is  superseded  by  the  contract 
of  building,  which  amounts  to  a  new  and  independent  agree- 
ment.^ But,  if  the  insured  refuses  to  permit  the  insurer  to 
rebuild,  the  latter  having  seasonably  elected  to  do  so,  the 
former  can  maintain  no  action  upon  the  policy.^ 

If  the  policy  is  valued,  and  the  loss  is  total,  as  has  been 
noticed  heretofore,  the  face  of  the  policy  fixes  the  amount.^ 

The  extent  of  the  insurer's  liability  is  often  modified  by 
particular  clauses ;  as,  for  example,  one  of  the  various  forms  of 
co-insurance  clauses  or  average  clauses  of  which  specimens  are 
given  in  the  appendix. 

The  object  of  the  co-insurance  clause  is  to  compel  the 
insured  to  take  out  insurance  to  the  full  value  of  his  property, 
or  else  to  become  a  co-insurer  to  the  amount  of  the  deficiency ; 
and  the  average  clause  applies  where  property  is  insured  as  an 
entirety,  though  located  in  several  places  or  buildings  in  pro- 
portions unknown  to  the  insurers,  and  its  object  is  to  compel  the 
insured  to  consider  the  property  as  ratably  distributed  where 
there  is  a  loss  in  one  place  or  building,  and  not  in  all. 

The  amount  of  recovery  to  which  different  classes  of 
persons  are  entitled,  as  dependent  upon  the  extent  of  their 
insurable  interest,  the  form  of  the  policy,  and  whether  they 
insure  for  themselves  alone  or  for  the  benefit  of  others  also 
interested  in  the  property,  has  been  sutficiently  explained 
under  the  discussion  of  general  principles. 

The  word  "cash"  is  omitted  from  the  Massachusetts 
form. 

§  134.  Reinstatement  Clause. — Optional  with  com- 
pany  to  take  all  or  any  part  of  the  articles  at  ascertained  or 
appraised   value^    or   to   rebuild  or   replace  property   lost    or 
damaged  within  reasonable  tiine^  on  giving  notice  within  thirty 
^  days  after  receipt  of  proofs^  but  there  can  be  no  abandonment 

I  to  the  company  of  the  property. 

This  option  is  reserved  by  the  company  to  protect  itself 

•  Wynkoopv.  Niagara  Fire  Ins.  Co.,        '  Deals  v.  Home  Ins.  Co.,  36  N.  Y. 
91  N.  Y.  478.     Morell  -^.  Irving  Fire    522. 

Ina.  Co.,  33  N.  Y.  429.  '  PhcEnix  Ins.   Co.  v.  McLoon,  100 

Mass.  475. 


C- 


§  134  Stand AJiD  Fike  Policy  :    Restoration.  141 

against  extravagant  claims,  and  to  prevent  disputes  as  to  the 
amount  of  damage. 

If  the  company  once  elect  to  do  so,  they  must  reinstate, 
and  cannot  afterwards  repudiate  their  election.  And  the  con- 
verse is  also  true,  for  the  selection  of  one  alternative  constitutes 
an  abandonment  of  the  other. ^ 

The  election  to  restore  or  rebuild  involves  not  only  the  rejec- 
tion of  the  right  to  pay  the  cash  value  to  the  insured,  but  also 
the  waiving  of  all  those  provisions  of  the  contract  having 
reference  to  that  method  of  performance.  From  the  time  of 
such  election  the  contract  between  the  parties  becomes  an 
undertaking  on  the  part  of  the  insurers  to  build  or  repair  the 
subject  insured,  and  to  restore  it  to  its  former  condition,  and  the 
measure  of  damages  for  a  breach  of  this  substituted  contract 
of  building  does  not  necessarily  depend  on  the  amount  of 
damage  inflicted  by  the  peril  insured  against.^ 

If  the  insurers,  in  the  attempt  to  restore  the  property,  do 
more  than  their  contract  obligates  them  to  do,  they  cannot 
claim  allowance  for  the  excess  of  value.^ 

If,  without  fault  of  the  insured,  the  company  either  neglects 
to  complete  the  work  or  is  prevented  from  doing  so  by  the  in- 
terference of  the  public  authorities,  the  loss  will  fall  upon  the 
insurers.^  So,  also,  if  during  the  rebuilding  or  repairing  the 
property  is  again  burned ;  for  here,  too,  through  no  fault  of 
the  insured,  the  insurers  have  failed  to  fulfill  their  contract. 

Whether  the  work  of  repairing  or  rebuilding  is  done  prop- 
erly and  within  a  reasonable  time,  must  generally  be  a  question 
for  the  jury,^  and  for  any  breach  of  their  obligations  the 
insurers  will  be  held  responsible,  according  to  the  ordinary 
rules  of  damage. 

The  rebuilding  clause  has  been  held  to  have  no  application 
to  a  mortgagee's  policy. 

The  Massachusetts  standard  policy  has  a  similar  provision 
allowing  the  company   to  restore  upon  giving  notice  within 

'  Times  Fire  Assur.  Co.  v.  Hawke,  '  Brinley    v.    National  Ins.  Co.,  11 

1  Fost.  &  F.  406.  Met.  195. 

"  Wynlioop  V.  Niagara  Fire  Ins.  Co.,  ■*  Brown  v.   Royal  Ins  Co.,  1  EI.  & 

91  N.  Y.  478;  s.  c,  43  Am.  Rep.  686.  EI.  853. 

Morell  V.' Irving  Fire  Ins.  Co.,  33  N.  ^Raskins    v.    Hamilton    Mut.    Ins. 

Y.  429.  Co.,  5  Gray,  432. 


142  Insurance  :   Life,  Fife,  Marine.  §  135 

fifteen  days  after  the  proofs  of  loss  are  submitted,  and  the 
company  is  declared  not  liable  for  more  than  the  sum  insured 
with  interest. 

§  135.  This  Entire  Policy  shall  be  Void Before 

this  phrase  was  inserted  in  the  policy,  tlie  better  opinion  was 
that  the  contract  of  insurance  was  severable  in  those  cases 
where  it  covered  several  items  of  property  which  were  insured 
in  separate  amounts  either  at  separate  rates  or  for  a  single 
premium  which  could  be  mathematically  apportioned  or 
approximately  so,  and  provided  the  breach  of  warranty  af- 
fected only  a  portion  of  the  items.^  But  the  phraseology  of 
the  standard  policy  admits  of  no  ambiguity.^ 

The  word  "  entire "  is  omitted  from  the  similar  clause  of 
the  Massachusetts  form. 

§  136.  Interest  of  the  Insvired  not  Truly  Stated 
in  the  Policy. — Except  for  this  requirement  the  insured 
might  describe  his  interest  in  the  most  general  terms,  and  if 
he  had  any  insurable  interest  at  all  it  would  avail  to  sustain 
the  contract.® 

He  might  describe  the  property  as  his  or  say  that  he  was 
the  owner,  and  if  that  were  true  in  any  substantial  sense  he 
could  recover  to  the  extent  of  his  insurable  interest ;  *  as,  for 
example,  where  the  insured  called  the  property  his  but  in  real- 
ity had  only  a  life  estate.' 

But  under  this  clause  he  is  bound  to  disclose  the  character 
of  his  insurable  interest ;  whether,  for  example,  he  is  owner, 
trustee,  consignee,  factor,  agent,  mortgagee  or  lessee,  and  make 
sure  that  the  description  of  his  interest  is  truly  noted  in  the 
policy.  It  is  only  right  that  the  insurers  should  know  the 
nature  and  extent  of  his  insurable  interest. 


'  Loomis  V.   Rockford  Ins.   Co.,   77  *  Dacey  v.    Agricultural    Ins.    Co., 

Wis.  87.      Schuster   v.  Dutchess  Co.  21  Hun,  83.     Trade  Ins.  Co.  v.  Barra- 

Ins.  Co.,  102N.  Y.  260.  cliff,   45   N.    J.   Law   54:'.;   s.  c,   46 

-  Smith  V.  Agricultural  Ins.  Co.,  118  Am.    Rep.  792.      Wainer  v.    Milford 

N.  Y.  518.     Geiss  V.  Franklin  Ins.  Co.  Mut.    Fire   Ins.    Co.,    153   Mass.    835 

123  Ind.  172.  (1891). 

'  Huffum  V.  Bowditch  Mut.  Fire  Ins.  '  Allen   v.    Charlestown   Mut.    Fire 

Co.,  10  Cush.  540.  Ins.  Co    5  Gray,  384. 


§  137  Fraud  :    False  Swearing.  143 

This  clause,  however,  does  not  require  him,  unless  particu- 
larly interrogated  on  the  subject,  to  state  the  circumstances 
which  relate  to  the  value  or  permanency  of  his  interest.  For 
example,  if  the  character  of  his  title  is  a  fee  simple  and  the 
property  is  consequently  described  as  his,  he  need  not  state 
that  he  is  only  a  part  owner ; '  or  that  there  are  mortgages  or 
other  incumbrances  outstanding  upon  his  property;^  or  that 
he  has  made  an  agreement  to  part  with  the  title  in  the  future;' 
or  that  his  property  has  been  seized  on  execution  but  not  yet 
sold/  Any  obligation  which  may  rest  upon  him  to  make  such 
disclosures  does  not  come  by  virtue  of  this  particular  clause. 

The  word  "  interest "  has  been  appropriately  used  in  the 
standard  form  in  place  of  the  words  "  title  or  possession,"  for 
the  reason  that  there  are  some  insurable  rights,  like  that  of 
mortgagee  or  surety  or  stockholder,  to  which  the  attributes  of 
title  and  possession  are  not  necessarilj^  incident.  But  it  is 
apprehended  that  the  substitution  of  this  broad  word  does  not 
impose  an  obligation  upon  the  insured  to  make  any  fuller  or 
other  disclosure  in  respect  to  his  title  or  possession  than  is 
required  by  the  other  form  of  words,  although  the  ruling  in 
the  following  cases  might  lead  to  a  different  conclusion.^ 

If  the  policy  is  made  payable  to  one  "  as  his  interest  may 
appear,"  the  interest  need  not  be  stated.  The  written  words 
overrule  the  requirement  of  the  printed  form.^ 

This  clause  does  not  appear  in  the  Massachusetts  form. 

§  137.  In  Case  of  Any  Fraud  or  False  Swearing. 

— This  provision  is  perhaps  only  the  express  declaration  of  a 
doctrine  understood  to  be  applicable  to  insurance  contracts. 
But  it  makes  clear  the  extension  of  the  rule  in  full  force  to 
intentional  misstatements  made  after  the  loss,  as  well  as  those 

'  Peck  V.  New  Lond.  Co.  Mut.  Ins,  '  Davis  v.  Quincy  Mut.  Fire  Ins.  Co., 

Co..  22  Conn.  575.      Turner  v.    Bur-  10  Allen,  113. 

rows,  5  Wend.  541.  *  Strong  v.  Manuf'rs    Ins.   Co.,    10 

'  Dolliver   v.   St.    Joseph  F.  &  M.  Pick.  40 ;  s.  c,  Am.  Dec.  507. 

Ins.    Co.,  128   Mass.    315  ;    s.    c,    35  '  Edmunds  v.  Mut.  Safety  Fire  Ins. 

Am.  Rep.  378.     Judge  v.  Conn.  Fire  Co.,  1  Allen,  311.    Abbott  v.  Hampden 

Ins.     Co.,    132    Mass.    521.      Carson  Mut.  Fire  Ins.  Co.,  80  Me.  414.     Lee 

V.    Jersey    City    Fire    Ins.    Co.,    43  a\  Agricultural  Ins.  Co.,  79  Iowa,  379. 

N.    J.    L.    300;    s.  c,    S9   Am.    Rep.  "  Dakin  v.  Liverpool,  L.  &  G.  Ins 

584.  Co.,  77  N.  Y.,  600. 


144  Insurance:    Fire,  Life,  Marine.  §137 

made  to  induce  the  insurers  to  accept  the  risk.  In  fact,  it  is  by 
the  statements  contained  in  the  proofs  of  loss  that  the  insured, 
if  unscrupulous,  is  most  tempted  to  deviate  from  strict  honesty 
in  order  to  svvell  the  amount  of  his  recovery. 

False  swearing  in  the  proofs  of  loss,  to  vitiate  the  policy, 
must  be  intentionally  false,  whether  b}'  a  fraudulent  overvalu- 
ation of  the  goods  destroyed,  or  a  statement  of  items  which 
really  have  no  existence,  or  by  an  undervaluation  of  what  is 
saved,  or  in  any  other  particulars.^  An  innocent  mistake,^  or 
an  innocent  though  exaggerated  estimate  of  value,  will  not 
avoid  the  policy.^  The  overvaluation,  in  order  to  work  a  for- 
feiture, must  be  so  plain  that  it  cannot  be  accounted  for  upon 
the  principle  that  every  man  is  naturally  prone  to  put  a  favor- 
able estimate  upon  the  value  of  his  own  property.'* 

The  question  of  fraud  or  false  swearing  is  generally  for  the 
jury,  and  the  company  does  not  receive  much  consideration  at 
their  hands  unless  a  clear  case  of  dishonesty  is  established. 
But  if  it  appears  b}'  the  plaintiff's  own  showing^  that  his  state- 
ment of  value  was  knowingly  and  intentionally  exaggerated,  a 
forfeiture  ought  to  be  found  by  the  court.® 

Where  the  discrepancy  between  the  representation  of  the 
insured  and  the  finding  of  the  fact  by  the  jury  is  very  great,  a 
limit  will  be  reached  where  the  court  will  intervene  and  decide 
as  matter  of  law  that  the  amount  of  the  error  is  consistent 
only  with  bad  faith. 

To  illustrate,  where  a  house  was  valued  at  $1,400,  and  the 
evidence  showed  its  value  to  be  about  $1,000,  it  was  held  that 
this  difference  did  not  estabhsh  as  matter  of  law  that  there  had 
been  a  breach  of  warranty  against  overvaluation.''' 

'  Chapman  v.  Pole,  23  L.  T.  N.  S.  Am.   Rep.    635.      Susquehanna  Mut. 

307.     Claflin  v.    Commonwealth   Ins.  Fire  Ins.  Co.  v.  Staats.  10'3  Ptnn.  St. 

Co.,  110  U.  S.  81.     Sternfeld  v.  Park  529.     Towne  v.  Springfield  Fire,  &c.. 

Fire  Ins.  Co.,  50  Hun,  262.     Mullin  v.  Ins.  Co.,  145  Mass.  582. 

Vt.  Mut.  Fire  Ins.  Co.,  58  Vt.  113.  "  Sturm  v.  Atlantic  Mut.  Ins.  Co., 

Watertown  Fire  Ins.  Co.  v.   Grehan,  63  N.  Y.  77.     Franklin  Fire  Ins.  Co. 

74  Ala.  642.     Titus  v.  Glens  Falls  Ins.  v.  Vaughan,  92  U.  S.  516. 

Co.,  81  N.  Y.  410.  *  Carson  v.  Jersey  City  Fire  Ins.  Co., 

5  Thierolf   v.    Universal   Fire    Ins.  14  Vroom.  300  •.  s.  c,  89  Am.  Rep.  584. 

Co.,  110  Penn.  St.  37.  "  American  Ins.   Co.  v.   Gilbert,  27 

*  Maher  v.  Hibernia  Ins  Co.,  67  N.  Mich.  429. 

Y.   283.       Jersey   City   Ins.    Co     v.  '  Smith  v.  Home  Ins.  Co.,  47  Hur, 

Nichol,  85  N.  J.  Eq.'  291;  s.   c,  40  80. 


§  137  Fraud  :    False  Swearing.  145 

Putting  the  value  of  $2,000  upon  goods  worth  $1,200  was 
held  not  to  prove  a  fraudulent  intent.^  Also,  where  a  value  of 
$5,000  was  given  to  property  worth  $2,000,  a  finding  of  no 
fraudulent  intent  was  not  set  aside.  But  there  was  also  a  find- 
ing that  the  actual  value  of  the  property  destroyed  exceeded 
the  amount  of  insurance.^  But  in  another  case  a  rule  nisi  for 
a  new  trial  was  made  absolute  where  the  claim  sworn  to  was 
£1,085,  and  the  amount  found  by  the  jury  was  only  £500,  the 
court  concluding  that  this  finding  of  fact  ought  to  be  considered 
in  effect  a  verdict  for  the  defendant.^ 

And  where  the  proofs  made  the  loss  three  times  as  large  as 
the  amount  found  by  the  jur}^  and  no  reason  being  disclosed 
for  supposing  that  the  misstatement  arose  inadvertentl}'',  the 
court  was  of  opinion  that  fraud  was  shown  as  matter  of  law 
and  that  the  policy  should  be  held  forfeited,  notwithstanding 
the  jury's  verdict  for  the  plaintiff.* 

It  will  be  observed  that  in  the  matter  of  innocent  misrepre- 
sentations of  fact  a  clear  distinction  is  made  between  those 
antecedent  statements. which,  if  material,  form  the  inducement 
for  the  contract,  and,  whether  material  or  not,  are  generally 
incorporated  in  the  contract  as  warranties,  and  those  state- 
ments, on  the  other  hand,  which  are  made  after  the  loss,  in  an 
attempt  to  give  to  the  insurers  such  information  as  may  be 
available  respecting  the  origin,  character,  and  extent  of  the 
loss  already  accrued.  But  statements  intentionally  false  in  the 
proofs  of  loss  amount  to  perjury.^ 

The  corresponding  clause  in  the  Massachusetts  standard 
policy  is  as  follows :  "  This  policy  shall  be  void  if  any  material 
fact  or  circumstance  stated  in  writing  has  not  been  fairly  rep- 
resented by  the  insured."  This  does  not  refer  to  statements  in 
the  proofs  of  loss,  but  only  to  the  inducing  representations 
upon  which  the  contract  is  based,  and  the  wording  of  the  clause 
makes  the  question  of  fairness  one  for  the  jury."  The  Mas- 
sachusetts statute  is  also  pertinent  upon  this  point. 

'  Behrens  v.  Germania  Fire  Ins.  Co.,  *  Stern f eld  v.  Park  Fire  Ins.  Co.,  50 

64  Iowa.  19.  Hun,  262. 

'  Dogge  V.   Northwestern  Nat.  Ins.  '  Avery    v.    Ward,    150    Mass.    160 

Co.,  49  Wis.  501.  (1H89). 

'  Levy  V.  Baillie,  7  Bing.  349.  '  Waiiur  v.  Milford  Mut.  Fire  Ins. 

Co.,  1;.3  Mass.  335  (1891  \ 
10 


CHAPTER  XII. 

STANDARD   FIRE    POLICY CONTINUED. 

§  138.  Other  Insurance. — If  the  insured  now  has  o^ 
shall  hereafter  inake  or  proGure  any  other  contract  of  insurance, 
whether  valid  or  not,  on  property  covered  in  whole  or  in  part  by 
this  policy  without  agreement  indorsed  or  added  thereon. 

Other  or  double  insurance  exists  wiiere  there  are  two  or 
more  pohcies  on  the  same  interest  and  subject,  and  against  the 
same  risk.  Insurers  need  to  know  the  amount  of  other  insur- 
ance to  enable  them  to  calculate  their  share  of  the  loss  under 
ihQ  pro  rata  clause,  and  they  also  generally  desire  a  disclosure 
on  this  same  point  in  advance  to  enable  them  to  determine 
whether  they  will  accept  the  risk  or  not ;  because  a  substantial 
over-insurance  of  tl^e  property  might  offer  a  temptation  to  the 
insured  eitlier  to  bring  about  the  fire  or  to  be  careless  in 
preventing  it. 

The  requirement  of  the  contract  is  quite  reasonable  and 
must  be  complied  with.^ 

It  must  be  noticed  that  insurances  of  different  interests,  aa 
for  example  the  })olicy  of  a  mortgagor  and  another  policy  by  a 
mortgagee,  are  not  within  the  operation  of  this  clause,  because 
they  do  not  constitute  double  insurance.  So  also  the  interests 
of  different  morto:aoees  are  distinct,^  and  the  different  interests 
of  joint-owners  ;  ^  but  where  warehousemen,  common  carriers, 
or  bailees  generally,  and  agents,  trustees,  or  co-partners,  take 
out  insurance  for  the  benefit  of  the  owners  or  others  interested, 
and  the  owners  or  other  parties  in  interest  take  out  insurance 
for  themselves  upon  the  same  subject  and  against  the  same 

>  Sanders  v.  Cooper,  115  N.  Y.  279,  »  Fox  v.  Phenix  Fire  Ins.  Co.,  53 

Landers  v.  Watertown  Fire  Ins.  Co.,  Me.  333. 

86  N.  Y.  414;  s.  c,  40  Ara.  Rep.  554.  '  Woodbury  Sav.   Bank  v.  Charter 

Liverpool,  I..  &  G.  Ins.  Co.  v.  Verdier,  Oak    F.    &    M.    Ins.   Co.,    31    Conu. 

S5  Mioh.  895.  518. 


§  138  Other  Insurance,  14Y 

risk,  this  constitutes  double  insurance.'  Such  other  insurance 
for  another  person  would  not  avoid  the  owner's  policy,  unless  it 
appeared  that  it  was  taken  out  by  his  authority  or  c(3nsent  : 
otherwise  it  really  would  not  constitute  a  contract,  because  the 
element  of  mutual  assent  would  be  wanting,  and  the  courts 
are  very  reluctant  to  vitiate  a  policy  unless  the  intent  on  the 
part  of  the  insured  to  procure  double  insurance  is  established  ; 
for  if  the  insured  is  not  aware  of  the  existence  of  other  insur- 
ance, one  of  the  reasons  for  inserting  this  clause  of  the  policy  is 
wanting.  No  temptation  to  commit  arson  could  be  inferred 
from  a  fact  of  which  the  insured  is  ignorant.^ 

In  one  case  it  was  held  that  where  the  consignor  effected 
an  insurance  with  the  warranty  "no  other  insurance,''  and 
unknown  to  him  the  consignees  also  insured  the  same  goods, 
the  first  policy  was  not  avoided.^  But  the  warranty  in  the 
policy  being  absolute,  principle  would  seem  to  require,  that,  if 
the  double  insurance  really  exists  by  legal  authority  of  the 
insured,  the  policy  in  suit  must  be  held  avoided,  whether  the 
existence  of  the  double  insurance  was  known  to  the  insured  or 
not.'^ 

Policies  in  which  the  clause  against  other  insurance  does  not 
contain  the  additional  words  "  valid  or  invalid "  have  given 
rise  to  much  difficulty  in  cases  where  two  or  more  policies  con- 
stituting double  insurance  contain  the  same  provision.  Shall 
both  policies  be  avoided,  or  only  one,  and  if  only  one,  which 
one  ?  There  is  in  each  a  condition  b}^  which  the  policy  con- 
taining it  ought  to  be  avoided,  and  yet  the  moment  that  either 
policy  is  held  void,  the  reason  for  vitiating  the  other  has  ceased 
to  exist. 

And  substantially  the  same  difficulty  arises  where  the  other 
insurance  is  in  fact  voidable  at  the  option  of  the  insurers  upon 
some  other  ground  of  forfeiture  which  renders  the  policy 
invalid. 

The  opinions  of  the  courts  upon  these  questions  are  varied 

'  Home  Ins.  Co.  v.  Bait.  Warehouse  '  WilJiamsv.  Crescent  Mut.  Ins.  Co., 

Co.,  93  U.  S.  527.     Sturm  v.  Atlantic  15  La.  Ann.  652. 

Mut.   Ins.  Co.,  63  N.  Y.  77.     Mussey  *  Phoenix  Ins.  Co.  v.  Copeland,  86 

V.  Atlas  Mut.  Ins.  Co.,  4  I^ern.  79.  Ala.    551.      Van    Alstyne    v.    ^tna 

!*  London  &  L.  Fire  Ins.  Co.  V.  Turn-  Ins.    Co.,    14    Hun,    360.     London   & 

bull,  86  Ky.  230.     Doran  v.  Franklin  L.  Fire  Ins.  Co.  v.  Turnbull,  86  Ky, 

Fire  Ins.  Co.,  86  N.  Y.  635.  230. 


148  Insurance  :    Fire,  Life,  Marine.  §  138 

and  irreconcilable.  A  full  presentation  of  the  subject  may  be 
found  in  the  last  edition  of  May  on  Insurance,  chapter  18.^ 

Mucii  of  this  difficulty  would  seem  to  be  removed  by  the 
insertion,  as  in  the  standard  form,  of  the  words  "valid  or 
invalid,"  to  which  force  must  be  given  ;  and  when  the  policy 
in  suit  contains  them,  it  should  be  held  vitiated  by  other  insur- 
ance, whether  void  or  voidable.*^ 

If,  however,  a  case  should  arise  where  the  other  policy  is 
upon  its  face  absolutely  null  and  void,  so  as  to  be  no  policy  at 
all,  but  a  piece  of  waste  paper,  or  where  the  policy,  though  still 
existing  as  a  document,  has  been  canceled,  or  where  it  has  been 
irrevocably  avoided  at  the  election  of  the  insurer  issuing  it, 
then,  in  either  case,  the  conclusion  seems  to  follow  that  there  is 
within  the  meaning  of  this  clause  no  other  or  double  insur- 
ance.^ 

The  case  of  Stevens  v.  Citizens  Ins.  Co.,  69  Iowa,  658,  is 
thus  referred  to  at  page  807  of  May  on  Insurance :  "  It  has 
been  held  that  the  clause  against  other  insurance,  valid  or  not, 
is  not  violated  by  a  prior  policy  which  had  become  absolutely 
void  by  its  terms.  It  is  difficult  to  see  why  the  words  '  valid 
or  not'  do  not  in  all  common  sense  cover  a  void  policy." 

This  criticism  of  the  Iowa  case  by  the  learned  editor  of  May 
would  be  just,  if  the  case  had  been  decided  on  the  ground  men- 
tioned by  the  reporter  in  the  head  note.  But  the  reported 
facts  in  evidence  disclose  the  important  consideration,  that, 
before  the  policy  in  suit  had  been  taken  out,  the  property  had 
been  removed  from  the  locality  in  which  it  was  situated  when 
insured  by  the  other  policy  ;  and  the  court  was  of  opinion  that 
this  removal  without  the  requisite  consent  of  the  insurer  took 
the  property  altogether  out  of  the  operation  of  the  first  policy, 
so  that  when  the  second  policy  was  issued  there  was  no  double 
insurance  existing  upon  the  property  in  question. 

It  is  clear  that,  in  the  absence  of  the  words  "  valid  or  in- 

'  Hubbard  v.  Hartford  Fire  Ins.  Co.,  '■'  jPhcenix  Ins.  Co.  v.  Copeland,  90 

33  Iowa,  325  ;  s.  c,  11    Am.  R.  125.  Ala.  386.     Phenix  Ins.  Co.   v.   Lamar, 

Thomas    v.    Builders     Mat.    F.    Ins  106   Ind.    513.      Allen   v.     Merchants 

Co.,  119  Mass.  121  ;  s.  c,  20  Am.  R.  Mut.  Co.,  30  La.  Ann.  1386;  s.  c.  31 

317.     Fireman's  Ins.  Co.  v.  Holt,  35  Am.  Hep.  243. 

Ohio  St.,  lf^9;   s.  c,  35  Am.  R.  601.  "Phenix    Ins.    Co.    v.    Lamar,    106 

Lackey  v.  Ga.  Home  Ins.  Co.,  42  Ga.  Ind.  513.     Am.  Ins.   Co.  v.   Replogle. 

456.  114  Ind.  6. 


§  140  Factories.  149 

valid,"  the  prohibition  of  this  clause  would  extend  only  to 
valid  other  insurance. 

The  corresponding  provision  of  the  Massachusetts  policy 
is  as  follows : 

"  This  policy  shall  be  void  if  the  insured  now  has  or  shall 
hereafter  make  any  other  insurance  on  the  said  property  with- 
out the  assent  in  writing,"  etc. 

§  139.  Factories. — Or  'if  the  sxibject  of  insurance  he  a 
manufact  I  lining  establishment^  and  it  he  operated  in  whole  or  in 
part  at  night  later  than  ten  o'clock,  or  if  it  cease  to  he  operated 
for  more  than  ten  consecutive  days. 

Exactly  what  constitutes  an  operating  of  a  factory  ma}^  not 
be  very  easv  to  define;  but,  in  general,  the  evident  meaning  of 
the  clause  is  that  the  active  working  of  the  business  of  the 
factory  must  be  suspended,  to  constitute  a  cessation.  Such 
continuation  of  the  furnace  fires,  or  even  of  the  running  of 
machinery,  as  could  not  from  the  nature  of  the  business  be 
temporarily  suspended,  is  not  to  be  considered  prohibited.  The 
mere  running  of  the  main  shaft  at  night  without  any  further 
operation  has  been  held  permissible.^ 

Running  the  factory  at  night  after  the  limit  named  in  the 
policy  avoids  it.^ 

Stopping  work  without  permission  even  for  repairs  falls 
within  the  prohibition  of  this  clause.^ 

The  Massachusetts  policy  contains  a  similar  clause,  naming 
nine  o'clock  p.  m.  instead  of  ten  o'clock,  and  thirty  days  as  the 
limit  for  cessation  of  operations. 

§  140.  Watchman. — It  is  sometimes  provided  that  a 
watchman  shall  be  kept.  What  is  a  reasonable  compliance 
with  such  a  provision  must  often  be  a  question  for  the  jury. 
Where  the  clause  of  the  polic}^  required  that  a  watchman  must 
be  kept  day  and  night,  it  was  held  in  a  very  recent  case  that 
the  policy  was  voided  because  only  one  watchman  was  kept  in 
the   building.     The   court   concluded  that  the  intent  of    the 

1  Whitehead  v.  Price,  2  Cr.  M.  &  R.         '  Day  v.  Mill  Owners  Mut.  F.  Ins 
447  ;  s.  c,  5  Tyrwh.  825.  Co.,  70  Iowa,  710. 

'  Reardon  v.  Faneuil  Hall  Ins.  Co., 
186  Mass.  121. 


^ 


160  Insurance  :   Fire,  Life,  Marine.  §  141 

iristrument  was  that  a  watchman  must  be  awake,  and  if  there 
was  only  one  watchman,  there  would  be  some  portion  of  the 
time,  presumably,  when  he  would  be  asleep.^ 

The  warranty  to  keep  a  watchman  must  be  observed.' 

§  141.  Increase  of  Risk.— 6>/'  if  the  hazard  he  increased 
hy  any  means  within  the  control  or  knowledge  of  the  insured. 

So  far  as  the  conduct  of  the  insured  himself  is  concerned, 
an  obligation  is  said  to  rest  upon  him  by  general  principles  of 
insurance  law  not  to  enhance  the  risk.^ 

This  important  clause  of  the  policy  must  receive  a  reason- 
able construction.  The  hazard  is  of  necessity  a  variable  quan- 
tity. It  constantly  changes  from  day  to  day,  though  perhaps 
imperceptibly,  from  the  operation  of  the  laws  of  nature  and 
various  circumstances  beyond  the  control  of  the  insured.  Such 
influences,  and  also  the  acts  of  persons  other  than  the  insured 
upon  or  in  respect  to  property  other  than  the  insured  property, 
are  in  general,  unless  unusual  or  extraordinary,  to  be  considered 
as  a  necessary  part  of  the  risk  which  the  insurer  has  under- 
taken to  sustain.  It  is  not  to  be  supposed  that  the  insured 
has  guaranteed  that  no  improvements  or  changes  shall  be  made 
anywhere  in  the  vicinity  of  the  insured  property,  but  it  is 
reasonable  to  exact  an  obligation  from  the  insured  that  he 
shall  not  allow  himself,  or  permit  others  in  control  of  the  in- 
sured property  with  his  consent,  to  change  its  nature  or  its  use 
m  such  a  way  as  to  make  the  risk  of  the  insurers  materially 
different  from  that  which  they  agreed  to  undertake.  Trivial 
variations  in  the  risk  necessarily  incident  to  the  use  of  the 
insured  property  are  presupposed  by  the  contracting  parties  to 
be  likely  to  occur ;  other  changes  are  not. 

This  clause  binds  the  assured  to  make  no  alteration  or 
change  in  the  structure  or  use  of  the  property  which  will  sub- 
stantially increase  the  risk,  and  it  prohibits  him  from  introduc- 
ing any  practice,  custom,  or  mode  of  conducting  his  business 
which  would  have  the  same  effect,  and  also  from  discontinuing 
any  precaution  already  used  or  represented  in  his  application 

'  Rankin  v.   Amazon  Ins.    Co.,  89        '  Hoffecker  v.   Newcastle  Co.  Mut 
Cal.  210  (1891).  Ins.  Co.,  5  Houst.  (Del.),  101. 

'  Bank  of  Ballston  Spa  v.  Ins.  Co., 
fiON.  Y.45. 


§  141  Increase  of  Risk.  151 

to  have  been  adopted  and  practiced  with  a  view  to  diminish 
risk.^ 

Erection  of  new  buildings  upon  the  ])i'operty  insured  or  ad- 
jacent thereto,  or  any  change  in  the  structure  of  the  buildings 
which  makes  them  more  inflammable,  or  the  introduction  of 
new  and  more  hazardous  employments  or  machinery,  are  hkely 
to  avoid  the  policy  unless  a  disclosure  is  made  to  the  company, 
and  its  consent  obtained  by  written  permit.^ 

The  introduction  of  electric  lighting  should  be  disclosed  to 
the  company,  but  the  making  of  ordinary  and  necessary  repairs 
does  not  fall  within  the  prohibition  of  this  clause.^ 

Whether  the  change  amounts  to  a  material  alteration  in  the 
risk  must  generall}'^  be  a  question  for  the  jury/ 

In  Iowa  it  has  been  held  that  giving  a  chattel  mortgage 
amounted  to  an  increase  of  risk  as  matter  of  law;^  but  this 
decision  is  very  questionable,  and  in  general  the  creation  of 
encumbrances,  whether  voluntary  as  in  the  case  of  mortgages, 
or  involuntary  as  in  the  case  of  tax  liens,  is  not  to  be  consid- 
ered as  increasing  the  risk  within  the  meaning  of  this  clause, 
although  they  might  result  in  increasing  the  inducement  to  the 
insured  to  destroy  his  projierty.® 

It  must  be  noticed  that  the  requirements  of  this  clause 
impose  upon  the  insured  an  obligation  which  in  terms  might 
seem  to  cover  all  material  changes  in  the  surrounding  or 
adjoining  premises  ;  but  inasmuch  as  nothing  is  specifically 
said  about  the  adjoining  premises,  and  the  word  "  knowledge  " 
is  connected  with  the  word  "control,"  it  is  doubtful  how  far 
the  courts  would  hold  the  insured  responsible  for  not  disclosing 
changes  made  by  others  upon  adjacent  premises.     The  only 

1  Houghton  T.  Manufrs.  Mut.  F.  Ins.  Co.,  18   N.  Y.   168.     Lyman  v.   State 

Co.,  8 Met.  114  ;  s.c,  41  Am.  Dec.  489.  Mut.  Fire  Ins.  Co.,  14  Allen,  329. 

Diehl  V.  Adams  Co.   Mut.    Ins.    Co.,  *  Shepherd  v.  Union  Mut.  Fire  Ins. 

58  Penn.  St.  443  ;  s.c,  98  Am.  Dec.  Co.,  38  N.  H.  231.    Ritter  v.  Sun  Mut. 

302.  Ins.  Co.,  40  Mo.  40.     Insurance  Co.  v. 

'  xMurdock  v.    Chenango   Co.    Mut.  McDowell.  oO  111.   120  ;  s.c,  99  Am. 

lias.    Co.,    3   Comst.    210.      Long    v.  Dec.  508.     Schmidt  v.  Peoria  M.  &  F. 

Beeber,   106   Penn.  St.   466  ;  s.c,  51  Ins.  Co.,  41  111.  295. 

^m.  Rep.  532.     Williams  v.  People's  "  Lee  v.    Agricultural  Ins.   Co.,  79 

F.  Ins.  Co.,    57  N.  Y.   274.     Cole  v.  Iowa,  379. 

Germania  Fire  Ins.  Co.,  91)  N.  Y.  36,  'Judge  v.  Conn.  Fire  Ins.  Co.,  132 

Stokes  V.  Cox,  1  H.  &  N.  320.  Mass.  521.     Hosford  v,  Germania  Fire 

»  Townsend    t.    Northwestern  Ina.  Ins.  Co.,  127  U.  S.  399. 


162  Insurance:   Fire,  Life,  Marine,  §  14^ 

safe  plan,  however,  is  to  bring  to  the  attention  of  the  insurers 
any  alterations  in  the  situation  which  might  affect  their  esti- 
mate of  the  risk.  Sometimes  policies  contain  an  express  pro- 
vision in  regard  to  an  increase  of  risk  by  adjacent  buildings  or 
in  the  use  of  surrounding  premises.  It  has  been  held  that  in 
such  a  case  no  obligation  is  imposed  upon  the  insured  to  dis- 
close changes  of  risk  unless  they  are  known  by  him  to  increase 
the  risk.^ 

Of  course,  after  receiving  notice  of  the  change  of  circum- 
stances, it  is  optional  with  the  company,  under  the  cancellation 
clause,  to  terminate  the  insurance  or  not,  and  after  exercising 
an  election  the  insurer  will  be  bound  thereby. 

Where  the  warranty  against  increase  of  risk  without  permis- 
sion is  absolute,  the  insured  is  responsible  for  alterations  made 
by  his  tenant  on  the  insured  property,  though  without  his 
knowledge  or  consent.^ 

If  the  change  of  risk  is  such  as  to  fall  within  the  ban  of 
this  provision  of  the  contract,  the  question  is  quite  immaterial 
whether  or  not  it  was  the  cause  of  the  loss;  for  the  risk  has 
become  other  than  that  which  was  contracted  for,  and  the  con- 
tract is  void  at  the  option  of  the  insurers.^ 

According  to  the  weight  of  authority  and  reason,  then,  a 
temporary  increase  of  risk  vitiates  the  policy  and  does  not 
simply  suspend  its  operation;^  but  a  contrary  rule  has  been 
adopted  in  Illinois.^ 

The  clause  in  the  Massachusetts  policy  is  substantially  the 
same. 

§  143.  Mechanics. — Or  mechanics  more  than  fifteen 
days  at  any  one  time. 

The  limit  of  time  which  has  wisely  been  inserted  in  this 
clause  tends  to  make  it  much  more  free  from  ambiguity,  and  if 
the  insured  allows  any  building  or  repairing  operations  to  go  on 

'  Rile  V,  Lebanon  Mut.  Ins.  Co.,  115  *  Kyte  v.  Commercial  Union  Assur. 

Pa.  St.  531.  Co.,    149    Mass.    116.      Jennings    v. 

'  Longv.  Beeber,  lOG  Penn.  St.  466.  Chenango  Co.   Mut.  Ins.  Co.,  2  Den. 

Liverpool   &  L.  Ins.   Co   v.   Gunther,  75. 

116U.  S.  113.  ^  North   British    &  Mercantile   Ins. 

'  Daniels  v.  Equitable  Fire  Ins.  Co.,  Co.  v.  Steiger,  13  111.  App.  482. 
48  Conn.  105. 


§  14:3  Unconditional  and  Sole  Ownership.  153 

for  more  than  the  required  time,  without  a  permit,  he  will  of 
course  vitiate  his  policy.^ 

In  the  Massachusetts  policy  this  subject  is  not  specifically 
covered,  but  repairs  fall  within  the  operation  of  the  general 
clause  in  regard  to  an  alteration  in  the  situation  or  circum- 
stances affecting  the  risk. 

§  143.  Interest  of  Insured. — Or  if  interest  of  the  in- 
sured he  other  than  unconditional  and  sole  ownership. 

This  provision  is  reasonable  and  valid. ^ 

If  the  character  of  the  title  of  the  insured  to  the  property  is 
a  fee,  but  he  is  only  a  part  owner,  the  policy,  of  course,  is  void 
unless  he  discloses  the  fact.  Or  if,  though  invested  with  the 
legal  title,  the  equitable  estate  and  the  right  to  the  legal  estate 
are  in  another,  the  policy  is  voided  unless  the  fact  is  stated.^ 

A  surviving  partner  is  not  the  sole  and  unconditional  owner 
of  the  undivided  partnership  estate.* 

But  as  a  rule  any  encumbrances  or  liens  upon  the  property 
of  the  insured  need  not  be  disclosed  under  this  clause.'* 

And  a  lease  from  the  insured  need  not  be  mentioned  ;  ®  but 
under  a  policy  which  by  its  terras  required  that  the  "  true  title 
and  interest"  of  the  insured  must  be  stated,  it  was  held  that  a 
mortgage  must  be  disclosed.''  A  vendee  in  possession,  with  an 
equitable  right  to  the  whole  title  unencumbered,  is  considered 
the  unconditional  and  sole  owner,  although  he  may  not  yet 
have  received  his  deed.^  If  it  is  equitably  true  that  the  insured 
is  the  unconditional  and  sole  owner,  the  clause  will  not  be  held 
to  have  been  violated.^  So  where  two  agreed  to  carry  on  a 
cotton  plantation,  one  to  furnish  stock,  money,  and  supplies, 

'  Mack  V.    Rochester  German   Ins.  Fire  Ins.   Co.,    132  Mass.   531.     Clay 

Co.,  106  N.  Y.  560.  Fire  &  M.  S.  Ins.  Co.  v.  Beck,  43  Md. 

'  Barnard  v.  National  Fire  Ins.  Co.,  358. 
27  Mo.  App.  26.  «  Ins.  Co.  v.  Haven,  95  U.  S.  242. 

'  Clay  F.  &  M.  Ins.  Co.  v.  Huron        '  Bowditeli  Mutual  Fire  Ins.  Co.  v. 

Salt  &  L.  M.  Co.,  31  Mich.  346.  WMnslow,  3  Gray,  415. 

*  Crescent    Ins.    Co.    v.     (amp,     64        "  Bonham  v.  Iowa  Central  Ins,  Co., 

Tex.  521.  25  Iowa,  328. 

'  Woodward  v.  I^epublic  F.  Ids.  Co.,        °  Lebanon  Mut.  Ins.  Co.  v.  Erb,  113 

32  Hun,  365.     DoUiver  v.  St.  Joseph  Penn.  St.  149.     Martin  v.  State  Ins. 

F.  &  M.  Ins.  Co..  128  Mass.  315  ;  s.c,  Co.,  44  N.  J.  Law,  485;  s.c,  43  Am 

86  Am.    Rep.    378.     Judge  v.   Conn.  R.  397. 


164  Insurance:   Fire,  Life,  Marine,  §  145 

the  other  to  furnish  the  plantation  and  superintend  the  business, 
the  former  to  be  indemniiied  for  his  advances  out  of  the  pro- 
ceeds of  the  cotton,  and  the  stock  and  implements  used  to  be 
equally  divided  at  the  end  of  the  year,  it  was  held,  that,  the 
cotton  not  being  worth  enough  to  pay  the  advances,  the  partner 
who  had  made  them  was  the  sole  and  unconditional  owner  of 
the  cotton  but  not  of  the  stock  and  implements ;  ^  but  one  who 
held  only  a  quit  claim  deed  from  a  second  mortgagee  was  not 
unconditional  and  sole  owner ;  ^  and  a  purchaser  at  a  sheriff's 
sale  who  has  not  paid  the  purchase  money,  there  being  an  out- 
standing right  to  claim  the  premises,  has  not  such  an  ownership.^ 
A  person  in  possession  of  property,  with  a  reservation  of  title  in 
the  seller  until  payment  of  the  notes  given  for  the  purchase 
price,  is  not  sole  and  unconditional  owner.^ 

Where  the  use  of  real  estate  was  contributed  as  a  partner's 
share  of  the  capital,  there  being  no  deed  directly  or  in  trust, 
the  firm  cannot  truly  describe  the  property  as  belonging  to 
them  by  an  entire,  unconditional,  and  sole  ownership.^ 

This  clause  is  not  in  the  Massachusetts  policy. 

§  144.  Leased  Ground.  —  Or  if  building  on  ground  not 

i  y^  owned  by  the  i?isured  in  fee  simple. 

If  the  insured  owns  only  part  of  the  fee,  it  has  been  held 
that  the  clause  would  be  violated  unless  as  provided  an  agree- 
ment giving  necessary  consent  is  indorsed  upon  the  policy ; ' 
or  if  he  has  only  a  life  estate  ; '''  but  if  he  has  the  equitable  right 
to  a  fee  simple  it  has  been  held  that  the  clause  would  not  be 
violated,  though  the  special  written  permission  had  not  been 
obtained.^ 

This  clause  is  not  in  the  Massachusetts  policy. 

,  §  145.  Chattel  Mortgage. — Or  if  personal  property  be 

'^    or  become  encumbered  by  a  chattel  mortgage. 

'  Noyes  v.    Hartford  Fire  Ins.  Co.,  *  Citizens'  Fire  Ins.  S.  &  L.  Co.  v. 

54  N.  Y.  668.  Doll..  35  Md.  89;  s.c,  6  Am.  Rep.  360. 

"  Southwick  V.    Atlantic  F.    &  M.  '  Scottish    Un.  &  Nat.  Ins.  Co.  v. 

Ins.  Co.,  133  Mass.  457.  Petty,  31  Fla.  399. 

•Security    Ins.  Co.    v.    Bronger,    6  '  Garver  v    Hawkeye   Ins.   Co.,  69 

Bush.  146.  Iowa,  203. 

♦  Geiss  V.    Franklin   Ins.    Co.,   133  "  Swift  v.  Vt.  Mut.  Fire  Ins.  Co.,  18 

Ind.  173.  Vt.  305. 


-V 


,^  146  Unconditional  and  Solk  Ownership.  165 

Except  for  this  restriction,  or  some  provision  of  the  policy  ex- 
pressly indicating  that  incumbi'ancos  must  be  disclosed,  it  would 
not  be  necessary  to  state  the  existence  of  a  chattel  mortgage. 
By  the  weight  of  authority  it  does  not  constitute  a  change  of 
interest,  title,  or  possession,  or  an  increase  of  risk.'  The  dictum 
to  this  effect  in  a  recent  Iowa  case  is  not  to  be  approved.^  But 
the  giving  of  a  chattel  mortgage  has  been  held  to  be  an  "  alter- 
ation of  ownership,'"  ^  and  has  also  been  said  to  be  an  "  alien- 
ation in  part."  *  But  this  could  not  be  held  to  be  so  under  the 
New  York  standard  policy. 

This  provision  also  is  absent  from  the  Massachusetts  policy. 

§146.  Foreclosure. — Or  if  with  the  knowledge  of  the 
insured  foreclosure  proceedings  he  G<ymm.enced  or  notice  of  sale 
hy  virtue  of  any  mortgage  or  trust  deed.  <5 

If  the  insured  obtains  such  knowledge,  of  course,  he  must  in- 
form the  insurers  and  give  them  the  opportunity  of  cancelling 
the  policy  if  they  so  desire.®  \ 

As  the  decisions  are  somewhat  conflicting  in  regard  to 
whether  giving  a  mortgage  constitutes  a  change  of  interest  or 
an  increase  of  risk,  it  is  important  to  notice  that  this  clause  of 
the  standard  policy  by  implication  would  seem  to  indicate  that 
giving  a  mortgage  need  not  be  disclosed  to  the  company  by 
virtue  of  any  requirement  in  the  policy,  unless  under  the  mort- 
gage a  default  should  have  occurred  on  the  part  of  the  insured,, 
and  foreclosure  proceedings  begun.®  ^ 

There  are  cases  suggesting  a  contrary  rule.'' 

This  clause  is  not  contained  in  the  Massachusetts  form  of 
policy. 

'  Wytheville  Ins.  Co.  v.  Stultz,  87        "  Conover    v.    Mutual     ln>.    Co.,    1 

Va.  629  (1891).     Hennessey  v.  Manhat-  Comst.  29  '.     Judge  v.  Lonii.  Fire  Ins. 

tan  Fire  Ins.  Co.,  28  Hun,  98.     Orrell  Co.,  133  Mass.   521.     Bishop  v.   Clay 

V.  Hampden  Fire  Ins.  Co.,  13  Grray,  431.  F.  &  M.  Ins.  Co.,  45  Conn.  430.    Shep- 

'  Lee  V.  Agricultural   Ins.   Co.,   79  herd  v.    Union   Mut.   F.   Ins.   Co.,  38 

Iowa,  379  (1890).  N.  H.  232.    Smith  v.  Monmouth  Mut. 

*  Edmunds  v.  Mut.  Safety  Fire  Ina.  F.    Ins.    Co.,    50    Me.    96.      Byers  v, 
Co.,  1  Allen,  311.  Farmers  Ins.  Co.,  35  Ohio  St.  606  ;  35 

*  Abbott  V.  Hampden  Mut.  Fire  Ins.  Am.  Rep.  623. 

Co.,  30  Me.  414.  '  Western  Mass.  Ins.    Co.  v.  Riker, 

'  Quinlan  V.  Providence  Washington  10  Mich.  279.     McL'ulloch  v.  Indiana 

Ins.  Co.,  39  N.  Y.  St.  Rep.S.'O.    Titus  Mut.  Fire  Ins  Co. ,  8 Blackford  (Ind.), 

V.  Glens  Falls  Ins.  Co.,  81  N.  Y.  410.  50. 


t  W  f^U//oy 


'>.. 


CHAPTEK  XIII. 

STANDARD    FIRE    POLICY CONTINUED. 

§  147.  Alienation  Clause. — Or  'if  any  change  other 
than  by  the  death  of  (Di,  insured  fake  jplace  in  the  interest,  title, 
or  possession  of  the  subject  of  insurance  {except  change  of  occu- 
pants without  increase  of  hazard),  whether  by  legal  process  or 
judgment,  or  by  voluntary  act  of  the  insured  or  otherwise. 

This  clause  is  perhaps  not  altogether  free  from  ambiguity. 
It  is  known  as  the  alienation  clause,  of  which  fifty  different 
forms  are  collected  in  the  last  edition  of  May  on  Insurance 
(pp.  552-556),  most  of  which  provide  for  the  case  of  a  sale, 
transfer,  conveyance,  or  alienation  of  the  property  under  divers 
forms  of  prohibitory  stipulations.  In  the  earlier  policies,  like 
the  present  Massachusetts  standard  form,  the  declaration  gen- 
erally was,  that  a  sale  or  alienation  without  written  assent 
should  avoid  the  policy.  Under  that  form  of  prohibition  it  was 
held  in  many  cases  that  to  effect  an  avoidance  of  the  policy 
there  must  be  a  sale  or  transfer  of  the  entire  interest. 

The  New  York  court  said  :  ''  So  long  as  the  insured  re- 
tains such  an  interest  that  he  may  be  a  sufferer  by  the  loss,  the 
policy  remains  valid  to  protect  that  interest."  ^ 

To  avoid  the  effect  of  such  adjudications,  which  really  nulli- 
fied the  clause  altogether,  some  policies  were  modified  so  as  to 
prohibit  any  sale  or  transfer  or  change  of  title  or  possession, 
in  whole  or  in  part,  without  written  consent.  Under  such  a 
clause  the  rule  is,  that  while  there  cannot  be  a  conveyance  of 
title,  or  parting  with  possession  in  whole  or  in  part,  yet  an 
incidental  change  relating  to  the  title  or  interest,  if  it  does  not 
alter  the  character  of  the  interest  or  ownership  of  the  insured, 
will  not  avoid  the  policy.     For  instance,  giving  a  real  estate 

'  Hitchcock  V.  North-western  Ins.  Co.,  26  N.  Y.  68.     Locke  t.  North  Am. 
liu.  Co.    13  Mass.  61. 


§  147  Alienation.  157 

mortgage  is  not  a  cause  of  avoidance  under  such  a  form  of 
alienation  clause,'  or  giving  a  ciiattel  mortgage,'^  or  placing  or 
incurring  other  liens  upon  the  property.^ 

A  contract  to  sell  is  not  a  sale  under  a  clause  prohibiting 
alienation;^  and,  although  the  new  phraseology  of  this  im- 
portant clause  in  the  standard  policy  is  unfortunately  indefi- 
nite, the  rule  understood  and  acted  upon  b\^  the  companies 
and  the  legal  profession  generally  is  that  a  contract  to  sell 
unaccompanied  by  delivery  of  possession  is  not  "a  change  of 
interest."  Consequently,  until  the  deed  of  conveyance  passes 
the  legal  title,  it  is  not  customary  to  alter  the  policies  of  insur- 
ance in  such  a  case.^ 

If  the  prohil)ition  were  simply  against  a  sale,  a  sale  in  fore- 
closure before  being  consummated  by  the  delivery  of  the  deed 
would  not  avoid  ;  ^  ijut  a  transfer  or  assignment  in  bankruptcy 
or  insolvency,  whether  voluntary  or  involuntary,  is  a  change  of 
interest,  and  unless  consented  to  by  the  insurer  will  vitiate  the 
policy.'' 

A  deed,  though  absolute  in  form,  if  given  only  as  collateral 
security,  is  regarded  only  as  a  mortgage  under  this  clause  of 
the  policy,  and  consequently  does  not  avoid  it,  though  given 
without  any  written  permission  of  the  insurers.^  But  except  as 
the  standard  policy  provides  otherwise,  the  death  of  the  insured 
would  operate  as  a  change  of  interest.'  And  a  devise  by  will  is 
also  a  change  of  interest  or  title.'" 


'  Conover    v.   Mutual    Ins.    Co.,    1  Clinton  v.   Hope  Ins.   Co.,  45  N.  Y. 

Comst.  290.     Jackson  v.   Mass.   Mut.  454. 

P.  Ins.   Co.,  23  Pick.  418;    s.  c,   U  '  Ayres  v.  Hartford  Fire  Ins.  Co. ,  17 
Am.  Dec.  09.     Phillips  v.  Merrimack  Iowa,  176.    Hill  v.  Cumberland  Valley 
Mut.  Fire  Ins.  Co.,  10  Cusbing,    350.  M.  P.  Co..  59  Pa.  St.  474.     Washing- 
Judge   V.    Conn.    Fire   Ins.    Co.,    133  ton  Ins.  Co.  v.  Kelley,  33  Md.  421. 
Mass.  521.  °  Haight  v.  Continental  Ins.  Co.,  92 

'  Hennessey  v.  Manhattan  Fire  Ins.  N.  Y.  51. 

Co.,  28   Hun,  98.     Rice  v.  Tower,  1  '  Hine  v.  Woolworth,  93  N.  Y.  75. 

Gray,  426.  Birdseye  v.  City  Fire  Ins.  Co.,  26  Conn. 

'  Baley  v.  Homestead  Fire  Ins.  Co.,  165.     Young  v.  Eagle  Fire  Ins.  Co., 

80  N.  Y.  21  ;  36  Am.  Rep.  570.     Hos-  14  Gray,  150. 

ford  V.   Hartford  Fire   Ins.   Co.,  137  *  Barry   v.    Hamburg- Bremen    Fire 

U.  S.  404.  Ins.  Co.,  HON.  Y.  1. 

*  Browning  v.   Home  Ins.    Co.,    71  "  Hine  v.  Woolworth.  93  N.  Y.  75. 

N.  Y.  508  ;  27  Am.  Rep.  86.     Pitney  '"  Sherwood  v.  Agricultural  Ins.  Co., 

^.  Glens  Falls  Ins.  Co.,  65  N.  Y.  6.  73  N.  Y.  447;  s.  c,  29  Am.  Rep.  180. 


158  Insurance  :    Fire,  Life,  Marine.  §  147 

The  phrase  "  change  of  title  "  has  been  many  times  con- 
strued, and  cannot  be  held  to  cover  the  giving  of  a  mortgage.' 

But  in  the  New  York  standard  policy  two  very  broad 
words  are  used  in  conjunction  with  each  other,  "change  of 
interest."  It  has  been  said  that  these  words  mean  "  every  con- 
ceivable  change  of  title  or  interest."  ^  And,  also,  in  another 
case  it  was  said  that  these  words  were  broader  than  the  phrase 
"sold  or  conveyed,"  and  must  be  held  to  cover  a  contract  to 
sell  which  had  been  partly  performed,  though  the  legal  title  had 
not  passed  from  the  insured.^  A  somewhat  similar  distinction 
was  made  in  several  other  cases.^  And  a  standard  author,  in 
construing  the  meaning  of  the  alienation  clause,  says :  "  But 
it  must  be  remembered  that  this  depends  entirel}^  upon  the 
language  of  the  policy.  If  the  policy  stipulates  against  any 
change  of  title,  or  alteration  therein,  or  against  an  alienation  in 
whole  or  in part^  a  mortgage  is  held  within  the  prohibition."' 

It  will  be  found,  however,  upon  an  examination  of  the 
forms  of  the  policies  in  respect  to  which  the  opinions  just  cited 
were  given,  that  they  contained  nothing  which  by  implication 
indicated  that  the  disclosure  of  mortgages  was  not  required ; 
whereas,  taking  the  New  York  standard  policy  in  its  entirety, 
the  rule  must  be  considered  clear,  that  the  giving  of  a  mortgage 
or  other  incumbrances  which  are  not  by  terms  forbidden,  Avill 
not  avoid  the  policy  though  no  written  consent  be  indorsed 
thereon.^ 

To  convey  the  property  and  take  back  a  mortgage  amounts 
to  a  sale  and  a  change  of  interest.'' 

This  clause  must  be  construed  in  connection  with  the  char 
acter  of  the  property  insured,  and  has  no  application  to  a 
fluctuating  stock  of  goods  in  a  store  or  factory,  which  it  must 
be  presumed  is  intended  to  be  sold  and  replaced  from  time  to 

'  Commercial    Ins.    Co.    v.  Spank-  Abbott   v.   Hampden  Mut.  Fire  Ins. 

neble,     52     111.     53;     4    Am.     Rep.  Co.,  30  Maine,  414. 
582.  '  Wood  on  Fire  Ins.,  2d  ed.,  p.  719 

'  Lappin  v.  Charter  Oak  F.   &   M.  (note). 
Ins.  Co  ,  58  Barb.  325.  °  Commercial  Ins.  Co. v.  Spankneble, 

"  Germond  V.  Home  Ins.  Co.,  2  Hiin,  swpra.      Judge  v.  Conn.  Ins.  Co.,  132 

540.  Mass.  5->l.    Barry  v.  Hamburg-Bremen 

*  Western  Mass.  Ins.  Co.  v.   Riker,  Fire  Ins.  Co.,  llO  N.  Y.  1. 
10  Mich.    279.     Edmunds  v.   Mutual        '  Savage    v.    Howard    Ins.  Co.,   5S 

Safety  Fire   Ins.    Co.,    1    Allen,   311.  N.  Y.  502  ;  s.  c,  11  Am.  Rep.  741. 


§  147  Alienation.  169 

time,  but  the  policy  usually  uttaclies  only  to  such  property  as 
is  in  the  designated  locality  at  the  time  of  loss.^ 

Where  the  insured  are  joint  owners  of  the  property  or 
jointly  interested  in  it,  as,  for  example,  in  the  case  of  partners 
or  trustees,  a  transfer  from  one  to  another  without  the  intro- 
duction of  any  now  pei'son  has  been  held  to  be  no  violation  of 
the  prohibition  of  the  alienation  clause  which  was  formerly  in 
use.  This  conclusion  was  put  upon  the  ground  that  the  com- 
pany having  exhibited  its  willingness  to  grant  insurance  to 
those  named  in  the  policy,  a  mere  shifting  of  interest  among 
them  would  not  be  objectionable  to  the  company.  The  reason 
for  this  rule  would  seem  to  admit  of  its  application  to  the  case 
where  the  parties  named  in  the  policy  are  not  joint  owners 
but  onl}^  jointly  insured.^ 

Whether,  under  the  alienation  clause  of  the  New  York 
standard  policy,  the  permission  of  this  rule  is  applicable  at  all, 
or  is  confined  to  a  case  where  joint  ownership  or  joint  interest 
exists,  or  whether  it  is  applicable  as  between  part  owners  or 
tenants  in  common,  who  have  not,  strictly  speaking,  a  joint 
ownership,  is  not  altogether  clear,  and  especially  since  the 
recent  case  of  Walton  v.  Agricultural  Ins.  Co.,  116  N.  Y.  326. 
In  that  case  the  policy  was  issued  to  Walton  and  his  wife  upon 
a  barn  the  title  to  which  was  in  Walton  at  the  time  of  the 
issuance  of  the  polic\^,  but  which  Walton  told  the  soliciting 
agent  of  the  company  he  was  about  to  convey  to  his  wife. 
Subsequently,  without  the  written  consent  of  the  company, 
which  the  terms  of  this  clause  of  the  policy  required,  Walton 
conveyed  the  title  through  a  third  person,  as  a  conduit,  to  his 
wife.  It  was  held  by  the  Second  Division  of  the  Court  of 
Appeals,  four  justices  to  three,  that  the  policy  was  void,  on  the 
ground  that  there  had  been  a  breach  of  "  the  warranty  against 
a  conveyance  of  the  property  without  the  written  consent  of 
the  company."  It  is,  perhaps,  a  misfortune  that  the  majority 
of  the  court,  in  their  concise  opinion,  do  not  state  the  grounds 

'  Wolfe  V.  Security  Fire  Ins.  Co.,  39  Peck  v.   New  London  Co.   Mut.  Ins. 

N.  Y.  49.  Co.,  33  Conn.  575.     Lockwood  v.  Mid- 

'  Hoffman  v.  ^tna  Fire  Ins.  <'o.,  dlesex  Mut.  Assur.  Co.,  47  Conn.  553. 

32  N.  Y.  405  ;  s.  c,  88  Am.  Dec.  337.  Walton  v.  Agricultural  Ins.  Co.,  116 

Powers  V.  Guardian  Fire  &  Life  Ins.  N.   Y.  .■>26.     Allemania  Fire  Ins.  Co 

Cq.,  136  Mass.  108;  49  Am.  Rep.   20.  v.  Peck,  133  111.  820. 


160  Insurance  :    Fire,   Life,  Marine.  §  147 

of  their  decision  with  as  great  particularity  as  is  exhibited  by 
the  dissenting  opinion  of  Mr.  Justice  Bradley.  Whether  the 
court  based  their  conclusion  upon  the  words,  "  if  the  interest  of 
the  parties  therein  be  cluinged  in  any  manner,"  or  upon  the 
fact  that  there  was  no  joint  interest  between  the  vendor  and 
the  vendee,  or  upon  the  fact  that  an  intermediary  was  called  in 
to  effectuate  the  transfer  between  husband  and  wife,  is  not 
made  clear  by  the  prevailing  opinion.  The  change  introduced 
into  this  clause  by  the  phraseology  of  the  New  York  standard 
policy  certainly  does  not  tend  to  the  elucidation  of  this  par- 
ticular question. 

A  leading  author  is  of  the  opinion  that  when  the  policy 
provides  that  any  "  change  of  interest "  shall  void  the  policy, 
a  sale  even  by  one  co-partner  or  other  joint  owner  to  another, 
will  produce  a  forfeiture.^  But  the  ruling  was  otherwise  by 
the  Alabama  court.^  Another  court  was  of  opinion  that  a 
division  on  petition  for  partition,  by  one  co-tenant  against 
another,  was  a  change  in  the  title,  though  not  strictly  an 
alienation.* 

A  careful  reading  of  the  New  York  standard  policy  in  its 
entirety  would  seem  to  indicate  that  there  was  no  intention 
of  restricting  the  liability  of  the  insurers  by  the  phraseology 
adopted  for  this  particular  clause  of  the  policy  ;  and  a  distinc- 
tion may  be  made  between  those  policies  in  which  the  words 
"  change  of  interest "  are  added  to  the  ordinary  alienation 
clause,  for  the  purpose  of  enlarging  its  meaning,  and  the  case  of 
the  New  York  standard  policy,  in  which  the  one  word  "  inter- 
est "  is  used  as  a  brief  and  appropriate  substitute  for  the  longer 
phrases  which  had  previously  been  employed. 

Whatever  may  be  the  rule  in  the  case  of  different  part  own- 
ers, who  are  not  joint  owners  but  are  insured  jointly,  there 
is  no  doubt,  of  course,  that  the  introduction  of  a  new  in- 
terest or  person  without  permit  voids  the  policy  under  this 
clause.* 

After  the  loss  has  occurred,  and  the  risk  has  terminated,  the 

'  Wood  on  Fire  Ins.,  sec.  357.  ■*  Malley  v.   Atlantic  F.  &  M.    Ins. 

'  Burnett  V.  Eufaula  Home  Ins.  Co.,  Co.,  51  Conn.  '<;22.     Savage  v.  How- 

46  Ala.  11  :  7  Am.  Rep.  581.  ard  Ins.  Co.,  52  N    Y.  506  ;  s.  c,  11 

'  Barnes  V.  Union  Mut.  Fire  Ins.  Co.,  Am.  Rep.  741. 
61  Maine,  110  ;  s.  c,  81  Am.  Dec.  502. 


§  148  Assignment  of  Policy.  161 

insui'ed  may  sell  or  transfer  his  interest  without  the  consent  of 
the  company. 

Some  policies  provide  for  forfeiture  in  case  the  property 
shall  become  encumbei'ed  in  any  way  without  the  written  con- 
sent of  the  insurer.  This  has  been  held  to  be  confined  to  such 
encumbrances  as  the  insured  voluntarily  puts  upon  his  property, 
and  not  to  tax  liens  or  judgments.^ 

A  morto'ao'e  made  on  the  farm  exclusive  of  the  house  will 
not  avoid  the  policy,  although  the  description  of  the  policy  in 
terms  covers  the  farm  as  well  as  the  house.^ 

Possession  under  the  alienation  clause  means,  in  general 
the  right  to  possession,  rather  than  the  physical  occupancy  o 
the  propei'ty. 

The  construction  of  this  clause  is  generally  for  the  court, 
though  if  the  material  facts  bearing  upon  the  question  of  the 
interest  of  the  insured  are  in  dispute,  the  difference  of  fact  may 
of  course  raise  a  question  for  the  jury. 

The  Massachusetts  policy  is  simpler.  It  forbids  a  sale  of 
the  property  without  written  assent  of  the  company.  \ 

§  148.  Assignment  of  Policy. — Or  if  this  policy  he 
assigned  hefore  loss. 

Without  express  prohibition  in  the  policy,  it  has  been 
held  that  a  fire  policy  is  not  assignable  except  with  the 
consent  of  the  insurer,  for  a  fire  policy  is  peculiarly  a  per- 
sonal contract,  and  does  not  run  with  the  title  to  the  prop- 
erty.'^ 

In  a  dissenting  opinion  in  the  last  case,  James,  L.  J.,  was  of 
opinion  that  the  contract  should  be  held  to  run  with  the  title 
to  the  land  to  the  extent  of  inuring  to  the  benefit  of  the  vendee 
under  an  executory  contract  of  sale. 

Marine  policies  at  common  law  were  considered  assignable 
without  express  consent  of  the  insurers,  because  of  custom  and 
commercial  convenience,  which  made  it  important  that  cargoes 
should  pass   freely  from  one  owner  to  another  without  con- 

>  Baley  v.  Homestead  Fire  Ins.  Co  ,  "^  Phenix   Ins.   Co.  v.  Hart,  39   111. 

80  N.  Y.  21  ;  3(1  Am.  Rep.  570.     Hos-  App.  509  (1890). 

ford   V.   Hartford    Fire   Ins.  Co.,   127  ^  Lett  v.   Guardian  Fire   Ins.   Co., 

U.  S.  404.  125  N.  y.  82.     Rayner  v.  Preston,  18 


\ 


Ch.  Div.  1. 


II 


162  Insurance  :    Fikk,  Life,   Marine.  §  148 

sultation  with  distant  insuratice  companies.'  But  this  con- 
sideration has  never  been  extended  to  a  fire  pohcy. 

A  pledge  or  deposit  of  the  pohcy  as  collateral  security  is 
not  prohibited  by  this  clause.^ 

By  the  better  opinion  it  is  held  that  an  assignee  of  a  policy 
need  have  no  insurable  interest  in  the  subject  of  insurance  if 
the  policy  is  originally  taken  out  in  good  faith,  *and  not  issued 
to  the  original  insured  as  a  mere  cover  to  avoid  the  statute 
against  wagers.^  But  the  United  States  Supreme  Court,  and 
some  others,  have  said  that  the  assignee  of  a  policy,  as  well  as 
the  assignor,  must  have  an  insurable  interest.^  It  is  important, 
however,  to  notice,  that  if  the  policy  is  a  fire  policy,  and  is 
assigned  without  a  transfer  of  the  interest  or  property  which 
it  covers,  the  assignee  is  merely  the  designated  payee,  and  he 
would  simply  have  an  equitable  lien  upon  the  proceeds  of  the 
insurance  to  which  the  original  insured  might  be  entitled. 

Where  the  property  or  subject  of  the  fire  insurance,  as  well 
as  the  policy,  are  transferred  to  the  assignee  with  the  assent  of 
the  company,  a  new  contract  is  thus  formed  between  the  com- 
pany and  the  assignee  which  will  not  be  disturbed  by  any 
subsequent  breach  of  condition  on  the  part  of  the  assignor.^ 
As  to  the  past,  however,  the  assignee  simply  steps  into  the 
shoes  of  the  assignor. 

No  one  except  the  company  can  make  objection  to  the 
assignment  from  the  original  insured  to  the  assignee,  on  the 
ground  that  the  company's  consent  was  not  obtained.^ 

After  the  risk  has  terminated  by  fire,  the  interest  of  the 
insured  becomes  a  chose  in  action^  which  he  has  a  right  to 
assign,  in  spite  of  this  clause,  without  asking  permission  of  the 
company.''  Some  of  the  courts  have  expressed  the  opinion 
that  the  insurers  cannot,  by  their  contract,  prevent  a  transfer 
of  this  right  of  action  after  the  loss  has  occurred.^ 

'  Pellas  V.  Neptune  Marine  Ins.  Co.,  '  Mellen  v,  Hamilton  Fire  Ins.  Co., 

5  C.  P.  D.  34.  17  N.  Y.  609.  Hall  v.  Dorchester  Mut. 

^  Griffey  v.  N.  Y.  Central  Ins.  Co.,  Fire  Ins.  Co.,  Ill  Mass.  53.     Imperial 

100  N.  Y.  417  ;  s.  c,  .-,3  Am.  Rep.  202.  F.  Ins.  Co.  v.  Dunham,  117  Pa.  St.  460. 

'  Olmsted  v.  Keyes,  85  N.  Y.  59;J.  "  Goit  v.  Natl.   Protection   Ins.  Co., 

*  ^^  arnock  v    Davis,  104  U.  S.  775.  ','5  Barb.  189.     West  Branch  Ins.  Co. 

'  Fogg  V.  Middlesex  Mut.  Fire  Ins.  v.  Helfenstein,  40  Pa.  State.  289  ;  s.  c, 

Co.,  lOCush.  337.  80  Am.  Dec.  573     Carroll  v.  Charter 

°  Leinkauf  v.  Caiman,  110  N.  Y.  50.  Oak  Ins.  Co.,  38  Barb.  402. 


§  149  Memorandum  :    Gas,  Benzine,  etc.  163 

The  Massachusetts  policy  forbids  an  assignment  without 
written  assent  of  the  company. 

§  149.  Memorandiiin  Clause. — Or  if  an  illuminat- 
ing gas  OP  vapor^  etc,  or,  if  there  he  kept,  xised,  or  allowed 
henzine,  dynamite,  etc. 

These  clauses  contain  memorandum  articles,  that  is,  a  list 
of  inflammable  substances,  themselves  peculiarly  liable  to  de- 
struction by  fire,  or  likely  to  involve  a  loss  so  extensive  that 
its  results  cannot  easily  be  made  the  subject  of  calculation. 
The  restrictions  are  proper  and  must  not  be  infringed  except 
as  provided  in  the  contract  by  written  agreement  indorsed 
upon  the  policy/* 

Where  the  memorandum  clause  does  not  contain  the  phrase 
which  here  appears,  "  any  usage  or  custom  of  trade  or  of  manu- 
facture to  the  contrary,"  it  is  permissible  to  the  insured  to  use 
the  articles  prohibited  by  this  general  printed  clause,  provided 
they  were  such  as  naturally  jjertain  to  the  stock  of  goods  or 
property  described  in  the  written  part  of  the  policy.  And  this 
is  put  upon  the  ground  that  the  written  words  must  control  the 
printed  form.  Custom  may  be  shown  to  aid  in  the  application 
of  this  rule.^ 

Thus  where  a  stock  of  fancy  goods  was  insured  with  privi- 
lege to  keep  fire-crackers  on  sale,  it  was  held  by  the  New  York 
court  that  keeping  fireworks  would  not  avoid  the  policy, 
although  by  the  printed  memorandum  clause  fireworks  were 
prohibited.^  But  the  Federal  Supreme  Court  came  to  the 
opposite  conclusion  on  the  same  facts.'* 

And  where  privilege  was  given  to  use  the  property  for  a 
printing  office,  the  keeping  of  camphene  was  held  to  appertain 
naturally  to  the  permitted  business,  although  camphene  ap- 
peared in  the  printed  memorandum  of  prohibited  articles.' 
Similarly  in  the  case  of  a  photographer's  stock.* 

'  United  Life,  Fire  &  Marine  Ins.  '  Steinbach  v.   Lafayette  Fire   Ins. 

Co.  V.  Foote,  22  Ohio  State,  340  ;  s.  Co.,  54  N.  Y.  90. 

c,    10    Am.    Rep.    735.      Barnum  v.  'Steinbach   v.    R.    F.  Ins.  Co.,  13 

Merchants   Fire   Ins.   Co.,  97  N.    Y.  Wall.  188. 

188.     Williams  v.   People's  Fire  Ins.  '  Harper  v.  N.  Y.  City  Ins.  Co.,  23 

Co.,  57  N.  Y.  274.  N.  Y.  444. 

-  Carrigan   v.   Lycoming   Fire   Ins.  "  Hall  v.  Ins.  I'o.  of  North  Amer., 

Co.,  53  Vt.  418  ;  s.c,  38  Am.  Rep.  6s7.  58  N.  Y.  292  ;  s.  c,  17  Am.  Rep.  255 


164  Insurance  :   Fiee,  Life,  Marine.  §  150 

It  is  permissible  to  show  by  parol  evidence  what  articles 
naturally  appertain  to  the  property  which  is  the  subject  of 
insurance.^ 

/  In  spite  of  the  attempt  in  the  standard  form  to  limit  this 
Tule  of  construction,  the  rule  will  still  prevail,  and  the  only 
;  effect  of  the  clause,  "  any  usage  or  custom  of  trade  to  the  con- 
;  trary,"  will  be  to  impose  upon  the  insured  tlie  burden  of  show- 
ing with  perhaps  greater  clearness  that  the  written  description 
fairly  covers  the  prohibited  articles  in  question.^ 

If  the  insured  allows  his  tenants,  or  other  persons  lawfully 
in  possession  of  the  premises  insured,  to  violate  the  provisions 
of  the  memorandum  clause,  the  policy  will  be  avoided.^ 

But  the  requirement  of  the  memorandum  clause  does  not  ex- 
tend to  such  insignificant  quantities  of  the  prohibited  articles  as 
one  would  use  for  medicine  or  for  cleaning  clothes,  or  for  any 
similar  use  which  must  be  presumed  to  be  allowed  by  the  con- 
tract of  insurance  in  view  of  the  character  and  use  of  the 
property/ 

The  elaborate  classification  of  risks  which  was  formerly 
indorsed  upon  many  of  the  policies  has  been  omitted  in  the 
standard  form. 

The  memorandum  clause  of  the  Massachusetts  policy  is 
more  liberal  to  the  insured. 

§  150.  Vacancy  Clause. — Or  if  a  huilding,  whether  in- 
tended for  ocGuimncy  hy  owner  or  tenant,  he  or  become  vacant  or 
unoccupied  and  so  remain  for  ten  days. 

The  addition  of  a  definite  length  of  time,  "ten  daj^^s,"  is  an 
improvement  upon  the  old  form.  This  provision  is  quite  reason- 
able and  must  be  observed,  inasmuch  as  the  insurers  have  a 
right  to  know  whether  the  subject  of  insurance  is  receiving 
ordinary  supervision  or  is  being  neglected.^ 

'  Pindar V.  Kings  Co.  Fire  Ins.  Co.,  ^Liverpool  &  L.   Ins.  Co.   v.  Gun- 

36  N.  Y.  648  ;  s.  c,  93  Am.  Dec.  544.  ther,  11(5  U.  S.  113. 

'  Birmingham   l".  Ins    Co.  v.  Kroe-  *  Wood  v.  North-western  Ins.  Co., 

gher,  8-3  Pa.  State,  64  ;  s.  c.  24  Am.  46  N.  Y.  421.     Williams  v.  People's 

Rep.  147.     Whitmarsh  V.  Charter  Oak  Fire  Ins.  Co  ,  57  N.  Y.  274.      Carlin 

F.  Ins.  Co.,  2  Allen,  581.     Cobb  v.  Ins.  v.  Western  Assur.   Co.,  57  Maryland, 

Co.  of  North  Amer. ,  li    Kansas,   98.  515  ;  s.  c,  40  Am.  Rep.  440. 

Western  Assnr.  Co.  v.  Rector,  85  Ky.  '  Hill  v.  Equitable  M.  F.  Ins.   Co.. 

ZU.  58  N.  H.  82. 


§  150  Vacancy.  165 

In  brief,  the  meaning  of  this  clause  is  that  if  the  property 
insured  is  a  (Iwelling'-house  it  must  have  an  occupant  living  in 
it.  And  in  tlie  case  of  other  property  it  must  have  that  kind 
of  care  and  superintendence  which  naturally  belongs  to  the 
character  of  the  occupancy  and  property  described  in  the  policy.' 
Holding  the  keys  of  a  house  is  not  occupancy,  and  this  is  true 
though  some  of  the  furniture  remains  in  the  house.^ 

The  word  "  unoccupied  "  has  been  added  to  the  word  "  va- 
cant," to  give  the  restriction  a  broader  effect  in  favor  of  the  in- 
surance company.  By  a  technical  construction,  "  vacant  "  has 
been  held  in  New  York  to  mean  empty  of  everything  but  air, 
and  "  unoccupied  "  to  mean  that  no  person  is  in  use  or  posses- 
sion of  the  property.^  Where  the  building  was  described  as  "a 
store  and  dwelling,"  ceasing  to  use  it  as  a  dwelling  does  not  make 
it  unoccupied.^ 

As  different  classes  of  property  naturally  require  different 
kinds  of  occupancy,  the  question  w^hether  the  building  is  occu- 
pied oi'  not  may  be  a  question  for  the  jury.^ 

If  the  property  is  a  factory  or  mill,  it  is  not  necessary  that 
any  one  should  be  residing  in  it  at  night ;  but  it  must  be  put  to 
some  practical  and  actual  use,  and  not  treated  simply  as  a  store- 
house.* 

"Where  a  trip-hammer  shop  was  not  in  operation,  but  a  man 
visited  it  almost  every  day  to  inspect  it,  it  was  held  that  the 
policy  was  avoided,  and  that  such  visits  did  not  constitute  an 
occupancy.'' 

But  where  a  schoolhouse  was  left  vacant  during  the  time 
of  the  ordinary  vacations,  and  the  furniture  was  not  removed,  it 
was  held  that  the  provisions  of  the  vacancy  clause  were  not 
violated.^ 

'  Halpin  v.  Phenix  Ins.  Co.,  118  N.  v.   Adriatic  Fire  Ins.    Co.,  85  N.   Y. 

Y.  172.     Poor  V.  Humboldt  Ins.  Co.,  162. 

125  Mass.  274;  s.  c,  28  Am.  Kep.  228.  *  Burlington  Ins.  Co.  v.  Brockway, 

Rockford  Ins.   Co.  v.  Wright,  39  111  39  111.  App.  43  (1890). 

App.  574  (1890).  '  Rockford  Ins.  Co.  v.  Storig,  31  III. 

-  Corrigan  v.  Conn.   Fire  Ins.   Co.,  App.  486  (18S8). 

122  Mass.  298.     Liteh  v.  North  Brit.  '  Halpin  v.  ^tna  Fire  Ins.  Co.,  120 

&  Mer.  Ins  ,  136  Mass.  491.  N.  Y.  70. 

"  Herrman   v.    Merchants  Ins.  Co.  '  Keith  v,  Quincy  Mat.  Fire  Ins.  Co., 

44  N.    Y.  Superior   Ct.    444  ;    s.    c .  10  Allen,  228. 

on  appeal,  81  N.  Y.   1«4.     Herrmau  "  Am.  Ins.  Co.  v.  Foster,  !J2  III.  334; 

s.  c,  34  Am.  Rep.  134. 


166  Insurance  -.    Fire,  Life,  Marine.  §  150 

In  another  case,  where  a  saw-mill  was  insured,  the  learned 
judge  who  pronounced  the  opinion  of  the  court  held  that  this 
could  not  be  intended  to  be  occupied  like  a  domicile,  and  that  a 
vacancy  clause  must  be  construed  in  view  of  the  situation  and 
character  of  the  property  insured,  and  the  contingencies  affect- 
ing its  use,  to  which  property  of  like  character  to  that  insured 
and  similarly  situated  is  ordinarily  subject ;  and  that  interrup- 
tions of  business  and  discontinuance  of  active  use  were  in  such 
a  case  to  be  anticipated,  and  would  no  more  avoid  the  policy 
than  would  the  omission  to  use  a  church  building  during  week 
days.^  Where  a  house  is  only  used  for  taking  meals,  and  a  barn 
only  for  storing  hay,  both  are  unoccupied,^  In  the  case  of  a 
saloon,  it  is  enough  if  a  clerk  lives  in  the  building  and  sleeps 
there.^ 

Where  a  ten  tenement  frame  block  had  two  of  its  tene- 
ments occupied,  the  court  was  of  the  opinion  that  it  was  not 
vacant  or  unoccupied.'*  But  if  buildings  are  separate  the  con- 
dition of  the  policy  is  to  be  applied  distributively  to  them,  and 
the  occupancy  of  one  of  the  buildings  named  in  the  policy  will 
not  excuse  a  vacancy  in  the  others.^ 

Vacancy  is  not  per  se  an  increase  of  risk,*  and  need  not 
be  stated  unless  the  policy  requires  it,  or  insurers  make  inquiry 
upon  this  point.'^ 

If  a  violation  of  this  clause  occurs,  the  policy  is  absolutely 
voided  and  not  merely  suspended  ;  but,  as  in  all  similar  cases,  it 
may  be  revived  by  the  insurers  by  some  act  of  confirmation 
after  discovery  of  the  forfeiture.^ 

Before  the  time  limit  was  added  to  this  clause  considerable 
uncertainty  existed  as  to  the  length  of  disuse  which  would 
constitute  a  vacancy,  and  the  conclusion  was  that  a  temporary 
absence  from  a  dwelling-house  where  the  occupants  left   the 

'  Whitney  v.  Black  River  Ins.  Co.,  '  Herrman  v.  Adriatic  Fire  Ins.  Co., 

72  N.  Y.  117,  by  Andrews,  J. ;  s.  c,  28  85  N.  Y.  163.     Herrman  v.  Merchants 

Am.  Rep.  116.     Lockwood  v.  Middle-  Ins.  Co.,  81  N.  Y.  184. 

sex  Mut.  Assur.  Co.,  47  Conn.  55:>.  *  Becker  v.  Farmers'  Mut.  Fire  Ins. 

"^  Ash  worth  v.  Builders  Ins.  Co.,  112  C^o.,  48  Mich.  610. 

Mass.  422.  '  Browning  v.  Home  Ins.  Co.,  71  N 

*  Stensgaard  v.  Natl.  Fire  Ins,  Co.,  Y.  508  :  s.  c,  27  Am.  Rep.  86. 

36  Minn.  181.  '  Moore  v.  Phenix  Ins.  Co..  62  N.  fl. 

*  Harrington  v.  Fitchburg  Mut.  Fire   240.      Wainer  v.    Milford   Mut.   Fire 
Ins.  Co.,  124  Mass,  126.  Ins.  Co.,  153  Mass.  335  (1891). 


§  152  Invasion,  Theft.   Neglect,   etc.  167 

fni'riiliire  and  household  goods  would  not  avoid  the  policy  or 
require  a,  written  consent.'  A  permit  by  the  company  to  leave 
the  house  vacant  for  the  summer  will  be  liberally  construed  as 
meaning  the  season  broadly  rather  than  the  summer  months.^ 

It  is  not  permissible  to  call  experts  and  ask  them  whether 
it  increases  the  risk  to  leave  a  house  unoccupied;^  and  the 
unambiguous  time  limit  contained  in  this  clause  cannot  be  dis- 
turbed by  evidence  of  custom  to  the  contrary  in  the  case  of  the 
same  or  similar  property.^ 

By  the  Massachusetts  policy  a  vacancy  for  thirty  days  is 
permitted  without  the  written  assent  of  the  company. 

§  151.  Certain  Restrictions, — This  company  shall  not 
he  liable  for  loss  caused  directly  or  indirectly  hy  invasion,  insur- 
rection, riot,  civil  war,  etc.,  or  by  theft,  or  by  neglect  of  the  insured 
to  use  all  reasonable  m,eans  to  save  the  property  at  and  after  a 
fire,  or  by  explosion  of  any  Mnd,  or  lightning. 

Some  of  these  exceptions  to  the  liability  of  the  insurers  may 
not  be  at  all  likely  to  happen,  but  if  they  should  happen  their 
results  might  be  so  disastrous  as  to  remove  them  from  the  oper- 
ation of  any  rule  of  average.  "  Usurped  power "  means  an 
armed  rebellion.  Except  for  the  provision  relieving  the  com- 
pany from  liability  for  loss  "  by  order  of  any  civil  authority," 
the  company  would  be  liable  if  a  building  near  to  that  insured 
were  blown  up  by  direction  of  the  authorities  to  stay  the  spread 
of  fire.'  Theft  and  explosion  have  been  previously  adverted  to 
in  §  128. 

Whether  the  insured  uses  reasonable  means  to  save  his  prop- 
erty is  a  question  for  the  jury." 

§  153.  Falling  Building. — Or  if  a  building  or  any 
part  thereof  fall  except  as  the  result  of  fire,  etc. 

'  Cummins  v.  Agricultural  Ins.  Co.  *  Stone   v.    Howard    Ins.    Co.,    153 

07  N.  Y.  260  ;  s.  c,  23  Am.  Rep.  111.  Mass.  4T5  (1891). 

.^tna    Ins.    Co.    v.    Meyers,    63   Ind.  "  City  Fire  Ins.    Co.    v.  Corlies,  21 

238.  Wend.  867  ;  s.  c.  34  Am.  Dec.  258. 

'^  Vanderhoef  v.    Agricultural    Ins.  Field  v.  City  of  Des  Moines,  39  Iowa, 

Co.,  46  Hun,  328.  575  ;  s.  c,  18  Am.  Rep.  46. 

^  Luce  V.  Dorchester  Mut.  Fire  Ins.  °  Ellsworth  v.  ^tna  Ins.  Co.,  89  N. 

Co.,  105  Mass.  297  ;  s.  c,  7  Am.  Rep.  Y.  186.    Briggs  v.  North  Amer.  &  M 

523.  Ins.  Co.,  53  N.  Y.  446. 


168  Insurance:    Fire,  Life,  Marine.  §  153 

Without  this  restriction  the  company  would  be  Hable  for  a 
conflagration  caused  by  a  collapse  of  the  building  or  a  part  of 
it,  unless  before  the  fire  started  the  building  had  lost  its 
character  as  a  building  and  had  become  a  mere  congeries  of 
materials.^ 

Where  seven  days  elapsed  between  the  fire  and  the  fall  of 
the  building  it  was  held  that  the  loss  by  the  latter  was  not  the 
proximate  result  of  fire.^ 

The  Massachusetts  standard  policy  contains  no  similar  pro- 
vision. 

§  153.  Memorandum  Articles. — This  company  shall 
not  he  liable  for  loss  to  accounts,  hills,  ciorrency,  deeds,  etc.,  or  for 
froperty  held  on  storage  or  for  repairs,  etc. 

If  the  property  enumerated  in  this  memorandum  clause  were 
covered  by  the  policy  the  insurers  would  be  subjected  to  claims 
of  uncertain  amount  and  very  difiicult  of  verification. 

"Storage"  means  keeping  for  safe  custody  to  be  delivered 
again  in  the  same  condition  substantially  as  when  received,  and 
as  employed  in  this  clause  of  the  policy  the  prohibition  is 
applicable  only  when  the  storing  or  safe-keeping  is  of  mer- 
chandise for  trading  purposes  and  when  the  storing  is  the  sole 
or  principal  object  of  the  deposit.  If  the  goods  are  merely 
kept  for  consumption  or  sale,  the  prohibition  of  this  clause  does 
not  apply.  For  example,  wine  kept  in  a  cellar  either  to  be 
sold  or  consumed  is  not  on  storage.^  And  raw  material  kept 
in  a  factory  to  be  manufactured  is  not  stored.*  So  if  any 
material  is  casually  or  temporarily  left  in  a  room.^ 

The  Massachusetts  policy  contains  a  list  of  memorandum 
articles,  "  bills  of  exchange,  notes,  accounts,  evidences  of  prop 
erty,  plate,  money,  jewels,"  etc.,  but  differs  widely  from  the 
New  York  clause  under  consideration. 

'  Nave  V.  Home  Mut.  Ins.  Co.,  37  '  N.  T.  Equitable  Ins.  Co.  v.  Lang- 
Mo.  430  ;  s.  c,  90  Am.  Dec.  394.  Fire-  don,  6  Wend.  623.  Hynds  t.  Sche 
man's  Fund  Ins.  <'o.  v.  Congregation  neetady  Co.  Mut.  Ins.  Co.,  11  N.  Y. 
Rodeph  Sholom.  80  111.  C58.  Huck  554.  O'Niel  v.  Buffalo  Fire  Ins  Co.. 
V.  Globe  Ins.  Co  ,  127  Mass.  306 ;  3  Comst.  1'22. 
s.  c.,34Am.  Rep.  373.  *  Vogel  v.  People's  Mut.  Fire  Ins. 

'  Gaskarth  V.  Law  Union  Ins,  Co.,  6  Co.,  9  Gray,  23. 

Ins.  L.  J.  159  (Manchester  (Eng.)  Civil  '  Hynds   v.    Schenectady   Co.    Mut. 

Court).  Ins.  Co.,  11  N.  Y.  554. 


CHAPTER  XIY. 

STANDARD     FIRE     POLICY — CONTINUED. 

§  154.  Survey  is  a  Warranty. — Application.,  survey.^ 
plan,  etc.,  shall  he  a  part  of  this  contract  and  a  vmrranty. 

The  statements  of  the  application  are  thus  incorporated 
into  the  contract,  and  must  be  construed  as  a  part  of  it.^  A 
mere  reference  to  the  application,  however,  would  not  be  suffi- 
cient to  make  it  a  part  of  the  contract  in  such  a  sense  as  to 
incorporate  its  statements  as  a  warranty.^  And  if  there  is  any 
phraseology  in  the  policy  which  gives  the  court  an  excuse  for 
construing  the  statements  of  the  application  as  representations 
rather  than  as  warranties,  it  is  pretty  certain  to  avail  itself  of 
it.^  A  mere  expression  of  opinion  will  not  be  construed  as  a 
warranty.'*  The  phraseology  of  the  application,  where  it  is 
made  a  part  of  the  contract,  may  itself  limit  the  conditions  of 
the  policy  in  favor  of  the  insured.^  But,  as  a  general  rule,  as 
we  have  already  seen,  in  considering  the  subject  of  warranty, 
all  the  statements  of  the  application  must  be  literally  true,  or 
exactly  fulfilled,  or  the  entire  contract  will  be  avoided. 
Whether  the  fact  stated,  or  the  act  stipulated  for,  is  material 
or  not  is  of  no  consequence.® 

Any  statements  in  the  application,  however,  which  have 
nothing  to  do  with  the  subject  of  the  contract,  or  with  the 
risk,   will    be    held  to    be    immaterial,    and   will    be    regarded 

'  Cushman  v.  U.  S.  Life  Ins.  Co.,  63  v.  New  Eng.  Mut.  Life  Ins.  Co.,  98 

N.  Y.  404.     Phoenix  Ins.  Co.  v.  Ben-  Mass.  381. 

ton,  87  Ind.  132.  ■•  Clapp  v.  Mass.  Benefit  Asso.,  146 

''Vilas  V.    N.   Y.    Cent.    Ins.    Co.,  Mass.  519.     Wheelton  v.  Hardisty.  8 

72    N.   Y.  590  ;    s.  c,   28  Am.  Rep.  El.  &  B.  232. 

18r>.  '  Washington     Life     Ins.     Co.     v. 

°  Houghton  V.  Manufacturers'  Mut.  Haney,  10  Kas.  525. 

Fire  Ins.   Co.,  8  Met.    114  ;  s.  c,   41  °  Bennett  v.  Agricultural  Ins.  Co., 

Am.  Dec.  489.     Phoenix  Life  Ins.  Co.  50  Conn.  420.   Ripley  v.  .^tnalns.  Co., 

V.  Raddin,  120  U.  S.  183.     Campbell  30  N.  Y.  136  ;  s.  c,  86  Am.  Dec.  363. 


lYO  Insurance  :    Fire,  Life,  Marine.  §  154 

as  having  been  gratuitously  volunteered.  For  an  innocent 
error  in  making  them  the  policy  will  not  .be  avoided.'  So, 
also,  in  the  case  of  a  promissory  warranty,  circumstances 
may  so  change  that  the  warranty  will  be  held  to  be  inappli- 
cable; for  example,  if  a  loss  occurs  before  the  time  for  the 
fulfillment  of  the  warranty  has  arrived,  the  loss  will,  never- 
theless, be  covered  b}'  the  policy.'^  A  warranty  of  the  exist- 
ence of  a  force  pump  on  the  insured  premises,  at  all  times 
ready  for  use,  implies  that  there  is  sufficient  power  to  work  the 
pump.^  Where  the  insured,  in  answer  to  the  question  whether 
•  his  title  to  the  property  was  absolute,  said  "  his  deceased  wife 
held  the  deed,"  it  was  held  that  there  was  a  breach  of  war- 
ranty, because  the  answer  was  not  full  and  true ;  the  fact  being 
that  his  wife,  in  whose  employ  he  had  been  prior  to  marriage, 
had  executed  in  his  favor,  after  marriage,  an  instrument 
acknowledging  an  indebtedness,  and  stating  that  it  should  be 
a  lien  upon  her  property.*  Where  the  insured  described  his 
building  as  "  two  stories  high,"  the  main  part  of  the  building  in 
fact  being  two  stories,  but  a  small  rear  addition  being  only  one 
story,  the  inaccuracy  was  held  to  be  no  breach  of  warranty.^ 
And  where  the  applicant  stated  that  the  building  to  be  insured 
was  detached  not  less  than  one  hundred  feet,  and  the  fact 
was  that  there  was  a  barn  about  sixty  feet  distant  from  it,  the 
court  held  that  there  was  no  breach  of  warranty.®  A  war- 
ranty that  a  room  is  warmed  by  a  stove,  and  that  the  pipe  is 
well  secured,  means  that  the  room  is  so  warmed,  and  the  pipe 
so  secured,  when  the  stove  is  in  use  ;  but  not  at  other  times.' 
Although  the  courts  have  been  disposed  to  relieve  the  insured, 
as  far  as  possible,  from  the  consequences  of  a  technical  viola- 
tion of  warranty,  the  legislatures  of  some  States  have  also 
interfered  by  statute,  and  have  provided  that  misrepresenta- 
tions, unless  material  to  the  risk,  shall  not  avoid  the   policy. 

'  Anderson  v.  Fitzgerald,  4  fl.   L.  *  Rohrbach  v.   Germania  Fire   Ins. 

Cas.  484.      Hartford  Protection  Ins.  Co.,  62  N.  Y.  47  ;  s.  c,  30  Am.  Rep. 

Co.  V.  Harmer,  2  Ohio  St.  452  ;  s.  c,  451. 

59  Am.  Dec.  684.  '  Wilkinsv.  Germania  Fire  Ins.  Co., 

'  Gloucester  Mfg.    Co.    v.    Howard  57  Iowa,  529. 

Fire  Ins.    Co.,  5  Gray,  497;  s.  c,  66  "Baldwin  v.   Citizens'   Ins,   Co.,  60 

Am.  Dec.  376.  Hun,  389  (1891),  by  Barnard,  P.  J. 

'  Sayles  v.  N.  W.  Ins.  Co.,  2  Curtis  '  Loud  v.  Citizens'  Mut.  Ins.  Co.,  2 

(Circuit  Court),  610.  Gray,  221. 


§  155        Standard  Fire  Policy  :    Who  are  Agents.  171 

By  a  Massachusetts  law,  any  provisions  of  the  apphcation,  or 
of  by-laws  of  the  company  to  become  part  of  the  contract, 
must  be  set  forth  in  the  body  of  the  policy. 

This  clause  is  not  in  the  Massachusetts  form  of  policy. 

§  155.  Who  are  Agents  of  the  Company. — In  any 

matter  relating  to  this  insurance,  no  person^  unless  duly  author- 
ized in  writing,  shall  he  deemed  the  agent  of  this  company. 

This  clause  has  already  been  discussed  in  a  previous  chap- 
ter, under  the  subject  of  waiver  and  estoppel.  The  stipulation 
is  not  void  or  against  public  policy,  and  force  must  be  given  to 
it.'  If  the  company  makes  it  true,  they  can  have  the  benefit  of 
it.  The  clause  is  tantamount  to  a  notice  in  respect  to  the 
method  the  company  adopts  to  give  authority  to  its  agents ; 
and  if  not  true,  or  if  in  fact  the  agent  has  an  authority  broad 
enough  to  waive  it,  the  fact  may  be  shown.^  The  true  doctrine 
of  waiver  and  estoppel  is  expounded  in  two  recent  cases  in 
l^QVf  York.^ 

Agency  involves  a  relation  existing  between  the  company 
and  the  agent,  independent  of  the  policy,  which  is  res  inter 
alios  acta,  and  hence  the  relation  may  be  shown  by  evidence 
outside  the  policy.* 

The  editor  of  the  last  edition  of  May  says :  "  It  makes  no 
difference  that  the  policy  declares  the  agent  to  be  the  agent  of 
the  assured,  not  of  the  company.  For  whom  a  person  is  acting 
is  a  matter  of  law  on  the  facts  of  every  case.  The  application 
precedes  the  policy*;  and  to  hold  that  a  provision  in  the  after- 
coming  policy,  unknown  to  the  assured  at  the  time  of  applica- 
tion, could  turn  the  insurance  agent  into  his  agent,  when  he 
thought  all  the  time  he  was  dealing  with  him  and  accepting 
his  advice  as  agent  of  the  company,  would  be  an  outrage." 

Logically    speaking,    this   stipulation    should    have    been 

'  Marvin  v.  Universal  Life  Ins.  Co.,  Ins    Co.,    60   Hun,   389.      Kausal  t. 

85  N.  Y.  278.  Minn.  Mut.  Fire  Ins.  Assoc,  31  Minn. 

» Insurance  Co.  v.  Norton,  96  U.  S.  17;   s.  c,   47   Am.    Rep.    776.    Par- 

234.  tridge  v.  Commercial  Fire  Ins  Co.,  17 

'  Wyman   v.    Phenix  Ins.  Co.,  119  Hun,   95.     Wilkinson  v   Ins.  Co.,  13 

N.  Y.   274.     Messelbach  v.    Norman,  Wall.    222.       Williams    v.    Hartford 

122  N.  Y.  578.  Ins.  Co.,  54   Cal.   452  ;  s.  c,   ^5  Am. 

*  Commercial   Ins.    Co.    v.    Ives,  5()  Hep.  77.     May  on  Ins.  p.  272  (3d  ed. 

IlL   403.      Baldwin   v.   Citizens  Fire  1891). 


172  Insurance  :    Fike,  Life,  Marine.  §  156 

omitted  from  the  conditions  of  the  New  York  policy,  as  it 
is  from  the  Massachusetts  standard  poHcy ;  but,  practically 
speaking,  it  is  an  eminently  appropriate  provision  if  it  is 
regarded  simply  as  a  notice  to  the  insured  that  it  is  unsafe  to 
deal  with  any  pretended  representative  of  the  company  unless 
he  can  show  his  written  credentials.^ 

Certain  States  have  legislated  upon  this  subject  fas,  for  ex- 
ample,  Iowa,  the  statute  of  which  provides  that  the  soliciting 
agent  shall  be  held  to  be  the  agent  of  the  insurance  company, 
"  anything  in  the  application  or  policy  to  the  contrary  notwith- 
standing." And  such  statutes  are  constitutional  and  control- 
ling, but  perhaps  unreasonably  interfere  with  the  freedom  of 
the  parties  to  settle  the  terms  of  their  contracts.^ 

§  156.  Renewals. — This  policy  may  hy  a  renewal  he  con- 
tinued under  the  original  stipulations^  etc.,  provided  that  any 
increase  of  hazard  must  he  made  known,  etc. 

A  pohcv  is  often  renewed  by  a  short  form  of  receipt  which 
obviates  the  necessity  of  issuing  a  new  policy. 

The  company  may  make  a  valid  renewal  by  parol,^  even 
though  the  policy  should  stipulate  that  a  renewal  must  be  in 
writing.* 

The  renewal  constitutes  in  effect  a  new  contract  based  upon 
the  same  terms  and  conditions  as  the  old,  but  for  some  pur- 
poses may  be  regarded  as  a  continuation  of  the  old.^ 

By  mutual  consent  the  new  contract  may  be  modified  in 
respect  to  any  of  its  provisions,  as  where,  for  example,  the  com- 
pany consents  to  a  change  of  location.* 

If  the  compan}^,  knowing  of  the  change  of  location  without 
express  consent,  issues  the   renewal  receipt  and  receives  the 

'Allen    V.    Germau  Am.    Ins.  Co.,  'First  Bapt.  Church   v.    Brooklyn 

123  N.  Y.  6.     Ins.   Co.   v.   Norton,  96  Fire  Ins.  Co.,  19  N.  Y.  P,05. 

0.   S.  234.     Walsh   v.    Hartford  Fire  U'ohen  v.  Continental  Fire  Ins.  Co., 

Ins.  Co..  73  N.    Y.    5.     Bill  v.   Lon-  67  Tex.  325  ;  s.  c,  (iO  Am.  Rep,  24. 

don   Assiir.    Corp.,    26    Abb.    N.    C.  •  Peacock  v.   New   York    Life   Ins. 

203.  Co.,  20  N  Y.  293      Hay  v   Star  Fire 

«  Continenta,'  Life  Ins.  Co.  v.  Cham-  Ins  Co.,  77  N.  Y.  235  ;  s.  c,  33  Am. 

berlain,  132  U,  S.  304.     McConnell  v.  Rep.  607. 

Iowa  Mut.  Aid  Assoc,  79  Iowa,  757.  "  Kathbone  v.  City  Fire  Ins.  Co.,  31 

Phil.  Fire  Assoc,    v.   New  York,  119  Conn.  193      Kunzze  v.  Amer.  Exch, 

U.  S.  110.  Fire  Ins.  Co.,  41  N.  Y.  412. 


§  15T  Standabd  Fire  Policy  :    Cancellation.  173 

premium,  this  amounts  to  an  implied  consent  to  the  change  of 
location.^ 

But  if  the  terms  of  the  renewal  contract  are  under  negotia- 
tion and  have  not  been  definitely  settled,  the  promise  to  give  a 
renewal  is  not  yet  binding  upon  the  company.^ 

A  parol  agreement  of  or  for  renewal  may  be  made  with  the 
same  freedom  as  a  parol  agreement  for  original  insurance. 

This  provision  is  omitted  from  the  Massachusetts  policy. 

§  157.  Cancellation. — This  policy  shall  he  canceled  at 
any  time  at  the  request  of  the  insulted  or  hy  the  company^  hy 
giving  Jive  days'  notice  of  such  cancellation.  If  this  policy  shall 
he  canceled  as  hereinhefore  provided.^  or  hecome  void,  or  cease,  the 
premium  having  heen  actually  paid,  the  unearned  portion  shall 
he  returned  on  surrender  of  this  policy  or  last  renewal,  this  com- 
pany retaining  the  customary  short-rate  premium,  except  that 
when  this  policy  is  canceled  hy  this  company  hy  giving  notice 
it  shall  retain  only  the  pro  rata  prem,iiini. 

There  are  statutory  provisions  in  New  York  and  elsewhere 
requiring  the  companies  to  cancel  on  request,  and  to  return  the 
premium  less  the  customary  short-rate  (see  appendix). 

Such  a  statute  is  compulsory  upon  the  company,  and  when 
request  has  been  made  to  it,  this  of  itself  terminates  the  insur- 
ance without  any  formal  cancellation  or  physical  defacement 
of  the  policy ;  but  the  request  to  terminate  the  contract  of  in- 
surance must  be  made  by  the  insured  or  his  authorized  agent 
to  the  insurer,  or  to  one  having  adequate  authority  to  act  in 
the  matter  in  its  belialf ;  and  the  request  must  be  actually  j 
received.  (When  the  request  is  sent  by  mail,  until  it  reaches 
the  insurer  or  its  agent  the  cancellation  is  incomplete  and  the 
policy  remains  in  force.^  The  demand  for  cancellation  must 
be  unconditional.^ 

Where,  as  in  the  Massachusetts  standard  policy,  it  is  pro- 
vided   that   the   insurance  is  terminable  by  the  company  on 

'  Ludwig  V.   Jersey   City   Ins.  Co. ,  ^  Crown  Point  Iron  Co.  v.  ^tna  Ins. 

48  N.  Y.    379;    s.   c,  8    Am.    Rep.  Co.,  127  N.  Y.  608  (1891). 

556.  *  Goit   V.    National  Protection  Ins. 

'  O'Reilly  V.  Corporation  of  London  Co.,   25   Barb.   Ib9.     Griffey  «^.  N.  Y. 

Assurance,  101  N.  Y.  575.     Johnson  v.  Central  Ins.  Co.,  li  0  N.  Y.  417  ;  s.  c, 

Conn.  Fire  Ins.  Co.,  84  Ky.  470.  53  Am.  Rep.  202. 


174  Insurance  :    Fiee,  Life,  Marine.  §  158 

giving  notice  and  refunding  a  ratable  proportion  of  the  pre- 
mium, giving  tlie  notice  of  cancellation  is  not  of  itself  sufficient, 
but  the  policy  continues  in  force  until  after  payment  or  tender 
of  the  return  premium.^ 

I  An  agent  employed  merely  for  the  purpose  of  procuring 
insurance  has  no  implied  authority  to  cancel.^  Kotice  by  the 
company  to  a  special  agent  of  the  insured  appointed  to  procure 
insurance  is  not  sufficient.^  But  notice  given  to  the  general 
agent  of  the  assured  is  sufficient/ 

The  insertion  in  the  New  York  policy  of  the  words  "  by 
giving  five  days'  notice  "  is  a  wise  one,  and  has  the  advantage 
of  fixing  definitely  the  time  at  which  the  policy  ceases  to  be  in 
force  after  the  notice  is  given,  which  heretofore  has  been  a 
vexed  question. 

By  the  Massachusetts  form  the  company  must  give  a  ten 
days'  notice  to  the  insured. 

§  158.  Mortgagee  Clause. — If  tdth  the  ecmsent  of  this 
company  an  interest  under  this  policy  shall  exist  in  favor  of  a 
mortgagee  or  of  any  person  or  corporation  having  an  interest 
in  the  subject  of  insurance  other  than  the.  interest  of  the  irv- 
sured  as  described  herein,  etc. 

A  form  of  mortgagee  clause  is  given  in  the  appendix.  It 
is  attached  to  the  policy  in  the  form  of  a  rider,  and  it  consti- 
tutes a  new  contract  between  the  company  and  the  mortgagee 
under  the  terms  and  conditions  of  the  policy  itself  as  modified 
by  the  provisions  of  the  mortgagee  clause.^  Where  without 
the  mortgagee  clause  the  policy  is  made  payable  to  a  mort- 
gagee, the  latter  stands  in  the  position  of  the  mortgagor,  and 
can  recover  only  when  the  latter  has  incurred  no  forfeiture.* 

In  case  of  loss  insurers  cannot  compel  the  mortgagee  to 

'  Van  Valkenburgh   v.  Lenox  Fire  ^  Stx)ne  v.  Franklin  Fire  Ins.    Co., 

Ins.    Co.,  51    N.  Y.  465.     Lyman    v.  105  N.  Y.  543. 

State   Mut.   Fire  Ins.  Co.,    14  Allen,  ^  Hastings  v.  Westchester  Fire  Ins. 

?39.  Co.,  73  ^'.  Y.  141. 

-  Insurance  Cos.  v.  Raden,  87  Ala.  °  Hine  v.  Homestead  Fire  Ins.  Co., 

311  ;  s.  c,  13  Am.  St.  Rep.  36.     Young  29  Hun,  84.     Harrington  v.  Fitchburg 

V.  Newark  Fire  Ins.  Co.,  59  Conn.  41  Mut.    Fire  Ins.   Co.,  134  Mass.    126. 

(1890).  Grosvenor  v.  Atlantic  Fire  Ins.  Co..  17 

'  Hermann  v.  Niagara  Fire  Ins.  Co.,  N.  Y.   391.      Bates  v.  Equitable  Ins. 

100  N.  Y.  411.  Co.,  10  Wall.  3S. 


§  158  Mortgagee  Clause.  175 

have  recourse  to  any  remedy  against  the  mortgagor  before 
calhng  upon  them  to  pay  under  the  pohcy.^  That  the  prop- 
erty still  held  by  the  mortgagee  as  collateral  security  for  his 
debt  is  ample  security  furnishes  no  defense  to  the  insurers.^ 

In  spite  of  a  mortgagee  clause  the  mortgagor  may  still 
avail  himself,  as  between  himself  and  the  company,  of  the  re- 
instatement clause  if  the  company  elects  to  rebuild.^ 

Sometimes,  instead  of  taking  advantage  of  the  mortgagor's 
policy  and  attaching  to  it  a  mortgagee  clause,  the  mortgagee 
effects  an  independent  insurance  upon  his  own  interest  as 
mortgagee.  If  he  does  this  without  any  agreement  between 
himself  and  the  mortgagor,  the  latter  has  no  interest  in  the 
insurance  moneys,  and  cannot  compel  the  mortgagee  to  apply 
them  toward  payment  of  the  debt."*  But  if  the  insurance  has 
been  procured  by  the  mortgagee  on  account  of  the  mortgagor, 
or  at  his  cost,  the  rule  is  otherwise.^ 

It  has  been  held  that  the  rights  of  the  mortgagee  to  the 
benefits  of  his  insurance  become  fixed  at  the  time  of  loss,  and 
that  he  niay  recover  the  insurance  though  the  debt  is  dimin- 
ished or  paid  subsequent  to  the  fire.^ 

The  English  courts  are  disposed  to  enforce  more  strictl}^  the 
doctrine  of  indemnity,  and  allowed  an  insurance  company  to 
recover  back  the  insurance  money  which  had  been  paid  to  the 
vendor  of  real  estate  while  still  the  owner  of  the  building 
which  he  had  contracted  to  sell,  and  before  he  had  received  the 
purchase  price.  This  decision  was  put  upon  the  ground  that 
the  company  became  subrogated  pro  tanto  to  the  purchase 
price  of  the  land,"  though  unpaid  at  the  time  of  the  fire.  This 
case  has  already  been  commented  upon  in  the  treatment  of 
subrogation.  Although  the  interesting  and  learned  opinions 
by  Justices  Brett,  Cotton,  and  Bowen,  pronounced  in  its  sup- 
port, exhibit  some  vagueness  of  thought,  it  would  appear  to  be 
the  doctrine  of  that  case,  that,  upon  paying  the  loss  under  the 

'  Excelsior  Fire  Ins.   Co.   v.  Royal  *  Mclntire  v.  Plaisted,  68  Me.  363. 

Ins.  Co.,  55  N.  Y.  343  ;  s.  c,  14  Am.  Foster  v.  Van  Reed,  70  N.  Y.  19  ;  s.  c. 

Rep.  271.     Foster  v.    Equitable  Mut.  26  Am.  Rep.  544. 

P.  Ins.  Co..  2  Gray.  216.  "  Waring  v.  Loder,  53  N.  Y.  581. 

'^  Kernochan  v.  N.  Y.   Bowery  Fire  *  Foster  v    Equitable  Mut.  Fire,  2 

Ins.  Co..  17  N.  Y.  428.  Allen  (Mass.),  216. 

Heilmann    v.    Westchester    Fire  '  Castellain  v.  Preston,  L.  R.,  11  Q. 

Ins.  Co.,  75  N.  Y.  7.  B.  D.  380. 


176  Insurance  :    Fire,  Life,  Marine.  §  158 

policy  of  the  vendor,  the  company  took,  by  subrogation,  a 
vested  rignt  in  the  executory  and  unperformed  contract  exist- 
inof  between  the  vendor  and  vendee,  of  the  benefit  of  which 
it  could  not  be  deprived  by  any  action  of  the  parties  to  that 
contract.  Sucli  a  doctrine  seems  to  be  unreasonable  and  incon- 
venient, and  uncalled  for  by  any  serious  consideration  of  public 
policy.  The  contract  of  sale  was  wholly  independent  of  the 
policy  of  insurance,  and  did  not  affect  the  company  in  any 
way,  provided  the  terms  of  the  policy  did  not  prohibit  it. 
Subrogation  could  not  apply,  for  the  vendee  was  not  a  wrong- 
doer primarily  responsible  for  the  loss,  nor  was  his  contract 
made  to  insure  a  preservation  of  the  property.  It  was  a 
mere  incident  to  the  property,  the  legal  title  and  insurable 
interest  in  which  still  resided  in  the  vendor.  Any  possible 
future  proceeds  from  the  executory  contract  of  sale,  if  the 
parties  thereto  should  ultimately  decide  to  carry  it  out,  could 
not  be  brought  into  an  estimate  of  the  amount  of  loss,  for  the 
reason  that  the  measure  of  damages  established  by  the  policy 
was  the  cash  value  of  the  propert}'  destroyed  at  the  time  of 
the  fire.  It  often  happens  that  a  fire  ultimately  turns  out  to 
be  a  source  of  profit  to  the  insured,  but  this  consideration  offers 
no  argument  in  favor  of  disturbing  an  insurance  adjustment 
already  settled.  The  general  policy  of  the  courts  in  passing 
upon  questions  of  insurance  law  has  been  not  to  allow  the 
doctrine  of  indemnity  to  obtrude  itself  inconveniently,  pro- 
vided the  contract  of  insurance  is  free  from  suspicion  of  being 
a  wager  at  the  time  of  its  inception.  The  English  court  con- 
ceded that  the  executory  contract  of  sale  furnished  no  defense 
to  the  insurers  either  in  full  ov  pi'o  tanto. 

In  the  Massachusetts  standard  a  mortgagee  clause  is  in- 
serted in  the  body  of  the  contract. 

If  a  mortgagee  is  a  mere  payee,  the  proofs  of  loss  must  be 
made  by  the  mortgagor,'  but  under  a  mortgagee  clause  the 
mortgagee  may  make  and  verify  the  proofs,  at  all  events  after 
refusal  of  the  mortgagor  to  do  so." 

>  State  Ins  Co.  v.  Maackens,  38  N.  '  Graham  v.  Firemen's  Ins.  Co.,  8 
i.  L.  564.  Ayres  v.  Hartford  Fire  Daly,  421.  A  Conn,  statute  gives  relis' 
Jns.  Co.,  17  Iowa,  176.  to  the  mortgagee,  Gen.  Stat.  §  2839. 


CHAPTER  XV. 

STANDARD     FIKE    POLICY CONTINUED. 

§  159.  Removal  of  Property  for  Safety. — If  prop 

i^ty  covered  hy  this  policy  is  so  endangered  hy  fire  as  to  require 
'*'einoval  to  a  place  of  safety^  and  is  so  removed,  etc. 

A  wise  provision,  making  more  definite  an  obligation  of 
considerable  uncertainty ;  for  the  general  principle  obtains, 
that  where  a  removal  is  reasonably  necessary  under  the  cir- 
cumstances of  the  case  on  account  of  impending  danger  b}'^  fire, 
damages  resulting  from  removal  are  recoverable  against  the 
insurer  as  proximate  loss.^ 

This  provision  is  not  inserted  in  the  Massachusetts  form. 

§  160.  Notice  and  Account  of  Loss. — If  fire  occur, 
the  i7isured  shall  give  immediate  notice  of  any  loss  therehy, 
in  tvritiiig,  to  this  company,  protect  the  property  from  further 
damage,  forthwith  separate,  etc.  *^, 

This  clause  is  the  result  of  a  careful  revision  of  the  pro- 
visions previously  existing  in  other  forms  of  policies.  It  is 
incumbent  upon  the  insured  to  pay  strict  attention  to  the 
requirements  of  the  contract  in  this  regard,  to  limit  the  loss  so 
far  as  it  lies  within  his  power  to  do  so,  to  give  an  opportunity 
to  the  company  to  take  such  measures  with  promptness  as  may 
seem  wise  to  them  to  effect  the  same  result,  and  to  furnish 
them  with  all  reasonable  evidence  to  enable  them  to  determine 
the  nature  and  extent  of  their  loss.^ 

An  "immediate"  written  notice  of  loss  is  required;  then 
afterwards,  "  forthwith,"  the  damaged  and   undamaged   per- 

'  Whitehurst  y.   FayetteviUe   Mut.  71.     Balestracci  v.  Firemen's  Ins.  Co., 

Ins.    Co.,  6_ Jones  (N.  C.)  Law,  35'i.  34  La.  Ann.  844. 

^hite  vTllepublic  Fire  Ins.  Co.,  57  '  Bumstead  v.  Dividend   Mut.  Ins. 

Me.  91  ;  s.  c,  3  Am.  Rep.  22.     Stan-  Co.,  12  N.  Y.  81. 
ley  V.  Western  Ins.  Co.,  L.  R.,  3  Ex. 
13 


^^ 


178  Insurance  :    Fire,  Life,  Marine.  §  160 

sonal  property  must  be  separated  and  arranged  and  inven- 
toried, and  within  sixty  days  the  verified  statement  must  be 
furnished,  giving  the  required  particulars  of  the  property  and 
the  loss.  The  terms  "immediate  notice"  and  "forthwith" 
mean  witli  due  diligence  under  the  circumstances  of  the  case, 
of  which  the  jury  will  ordinarily  be  the  judge,  unless  the  delay 
seem  to  the  court  so  great  as  to  be  inexcusable.^ 

In  one  case  the  court  decided  that  a  delay  of  forty-eight 
hours  in  giving  the  notice  of  the  fire  was  without  excuse,  and 
a  non-suit  was  directed.^  In  another  case,  where  the  policy 
required  immediate  proof  and  notice  of  loss,  a  delay  of  thirty- 
five  da3's  in  sending  an  inventory  of  loss  was  considered  excus- 
able.^ But,  in  another  case,  a  delay  of  eleven  days  without 
sufficient  explanation  was  held  to  be  unreasonable.^ 

The  policy  is,  by  a  previous  clause,  made  payable  sixty  days 
after  due  notice,  ascertainment,  estimate,  and  satisfactory  proof 
of  the  loss  have  been  received.  "  Satisfactory  proof  "  means 
proof  which  ought  to  be  satisfactory.^  But  it  is  essential  that 
the  proofs  should  be  furnished  within  the  specified  time,  unless 
the  company  waives  the  requirement.^ 

A  proper  mailing  of  a  notice  of  loss  is  a  sufficient  com- 
pliance with  the  requirement  of  the  policy,  that  immediate 
notice  of  loss  must  be  given  in  writing.'''  Whether  the  written 
proofs  constitute  a  compliance  with  the  warranty  of  the  policy, 
is  properly  a  question  for  the  court.^ 

In  regard  to  the  essential  conditions  of  the  contract  of 
insurance,  we  have  noticed  that  insanity  or  other  disability 
furnishes  no  excuse  for  a  violation,  but  this  rigid  rule  is  relaxed 

'Bennett  v.  Lycoming  Co.  Mut.  Ins.  '  Walsh  v.  Washington  M.  Ins.  Co., 

Co.,  67  N.  Y.  274.    Kimball  v.  Howard  32  N.  Y.  427.      London  Guarantee  & 

Fire  Ins.  Co.,  8  Gray,  33.     People's  M.  Ace.  Co.  v.  Fearnley,  43  L.  T.  N.  S. 

Ace.  AsfiO.  V.  Smith.    126  Pa.  St.  317.  390. 

Kingsley  v.  New  England  Mut.  Fire  "  Underwood  v.  Farmers  Joint  Stock 

Ins.  r'o.,  8  Cu.sh.  393.     Rokes  v.  Am-  Co.,  57  N.  Y.  500. 

azon   Ins.  Co.,  51   Md.   512  ;  s.  c,  34  '  Susquehanna  Mut.  Fire  Ins.  Co.  t. 

Am   Rep.  323.     133  N.  Y.  394.  Tunkhannock  Toy  Co.,  97  Pa.  State, 

^  Brown  v.  London   Assur.   Co.,  40  424;  s.  c,  39  Am.  Rep.  816.     Badger 

Hun,  101.  V.    Glens    Falls    Ins.    Co.,    49    Wis. 

'  Knickerbocker  Ins.  Co.  v.  McGin-  389. 

nis.  87  111.  70.  "  Travellers  Ins.    Co.  v.  Sheppard, 

*  Trask  v.  State  F.  &  M.  Ins.  Co.,  29  85  Ga.  802  (1890). 
Pa.  St.  198;  s.  c.,  72  Am.  Dec.  622. 


1>> 


§  161  Proof  of  Loss.  179 

somewhat  in  respect  to  the  pi'ovisions  requiring  proofs  of  loss 
after  the  risk  has  terminated  ;  and  insanity  has  been  held  to 
constitute  a  sufficient  excuse  for  the  omission  to  serve  a  pre- 
liminary notice  of  loss  upon  the  company.^  Furnishing  proofs 
of  loss  is  a  condition  precedent,  and  the  loss  of  the  policy  is  no 
excuse  for  not  performing  it.^ 

If  the  insured  is  out  of  the  country,  and  cannot  make  the 
required  proofs  as  stipulated  by  the  policy,  it  has  been  sug- 
gested that  the  court  might  grant  relief,  at  any  rate,  to  the 
extent  of  holding  that  sufficient  proofs  by  an  agent  constitute 
a  compliance/     In  general  the  insured  must  make  the  oath. 

If  the  company  entertains  any  objection  to  the  proofs  on 
account  of  technical  defects,  it  must  make  an  objection  upon      .^"^ 
that  specified  ground,  or  it  will  be  held  to  have  waived  them, 
provided  they  relate  to  matters  which  upon  notice  could    bo  " 

remedied  by  the  insured ;  and  a  refusal  to  pay  the  policy  based  J 

upon  other  grounds  is  held  to  imply  a  waiver  of  the  formal 
and  technical  defects  in  the  proofs.^ 

If  demanded,  plans  and  specifications  must  be  furnished.' 
And  so  also  must  the  required  certificate  of  the  nearest 
magistrate.  But  the  court  will  not  go  into  a  very  nice  cal- 
culation to  determine  whether  one  magistrate  is  a  little  nearer 
to  the  place  of  the  fire  than  another.®  Upon  this  subject  there 
has  been  legislation  (see  appendix). 

The  requirements  of  the  Massachusetts  policy  are  not  so 
detailed. 

§  161.  Exhibit  Remains ;  Svibmit  to  Examina- 
tions ;  Books  of  Account,  etc. — The  insured,  as  often 
as  required^  shall  exhibit  to  any  person  designated  hy  this  com- 

'  Insurance  Cos.  v.  Boykin.  13  Wall.  '  Fawcett  v.    Liverpool,    London  & 

433.     Wheeler  v.  Conn.  Mut.  Life  Ins.  Globe  Ins.  Co.,  37  U.  C.  Q.  B.  225. 

Co.,  82  N.  Y.  543  ;  s.  c.  37  Am.  Rep.  «  Daniels  v.  Equitable  Fire  Ins.  Co., 

594.     But  see  Conn.  Gen.  Stat.  §  2839.  50  Conn.  551.    Araer.  Cent.  Ins.  Co.  v. 

^  Blakeley  v.   Phoenix  Ins.   Co.,  30  Rothchild,    82    111.    166.      Tinley    v. 

Wis.  205  ;  s.  c.  91  Am.  Dec.  388.  North  Am.   Fire  Ins.   Co.,  25   Wend. 

•  Walsh  T.  Vt.  JMut.  Fire  Ins.  Co.,  874.  Williams  v.  Niagara-  Fire  Ins. 
B4  Vt.  351.     See  112  111.  68.  Co.,   50   Iowa,   561.      Dolliver  v.    St. 

*  Priest  V.  Citizens  Mut.  Fire  Ins.  Joseph  Fire  &  Marine  Ins.  Co., 
Co.,  85  Mass.  (3  Allen),  601  Brink  v.  128  Mass.  315;  s.  c,  35  Am.  Rep. 
Hanover  Ins.  Co.,  80  N.  Y.  109.  378. 


180  Insukance  :    Fikk,  Life,  Marine.  §  161 

pany  all  that  remains  of  any  property  herein  described^  and 
submit  to  examinations  under  oath^  etc.^  and  produce  for 
examination  all  books  of  acoourit,  etc. 

Those  pi-ovisions  confer  great  privileges  upon  the  insurers, 
and  ought  to  be  enforced  by  the  latter  only  within  bounds  of 
reason  -awX  propriety.  They  are  binding  upon  the  insured  so 
far  as  it  lies  within  his  power  to  comply  with  them.* 

Under  tliis  clause  the  courts  do  not  require  the  production 
of  proofs  which  cannot  be  produced  because  they  have  been 
destroyed  by  the  fire,  or  for  any  reason  are  beyond  the  control 
of  the  insured.^  And  if,  by  diligent  effort,  duplicate  bills,  in- 
voices, or  vouchers  cannot  be  obtained,  their  production  will 
be  excused.^    But,  otherwise,  they  must  be  produced.* 

The  company  seldom  requires  the  insured  to  submit  to  a 
personal  examination,  except  in  those  cases  where  fraud  is  sus- 
pected.  But  in  such  cases  this  provision  of  the  policy  is  some- 
times of  great  value  to  the  company,  and  especially  if  it  is  ob- 
tained before  the  insured  employs  legal  advice.  If  the  insured 
gives  false  testimony  in  detail  upon  his  examination  had  under 
the  terms  of  the  policy,  it  is  generally  a  source  of  great  embar- 
rassment to  him  upon  the  subsequent  trial  of  his  law-suit.  Upon 
this  preliminary  examination  the  representative  of  the  company 
finds  it  particularly  desirable  to  cross-examine  the  insured  in 
regard  to  the  location  of  the  various  pretended  items  of  prop- 
erty said  to  be  in  the  building  at  the  time  of  the  fire,  and  also 
to  compel  him  to  state  in  detail  where  and  when  he  purchased 
them.  If  the  property  is  fictitious,  it  is  very  difficult  for  him 
to  tell  a  plausible  stor3\  and  he  soon  finds  himself  obliged  to 
have  recourse  to  the  suspicious  response,  that  he  cannot  remem- 
ber. If  he  locates  the  fictitious  property  in  detail,  and  does 
not  have  a  copy  of  his  testimony  at  the  subsequent  trial 
months  or  perhaps  years  afterwards,  he  will  be  very  apt,  when 
in  the  witness  chair,  to  tell  an  entirely  different  story. 

If  he  states  the  times  and  places  of  purchases  from  other 

1  O'Brien  v.  Comm'l  Fire  Ins.  Co.,  Council  Bluffs  Ins.  Co.,  65  Iowa,  308. 

63  N.  Y.  108.     Titus  v.  Glens   Falls  People's  Fire  Ins.  Co.  v.  Pulver,  127 

Ins.    Co.,    81    N.   Y.  410.     Claflin  v.  111.  246 

Commonwealth   Ins.   Co.,    110   U.    S.        ^Miller  v.  Hartford  Fire  Ins.   Co., 

81.  70  Iowa,  704. 

■^  Mech.  Fire  Ins.  Co.   v.  Nichols,  1        ■*  O'Brien   v.    Commercial  Fire   Ins. 

Harr.    (N.     J.),    410.      Eggleston    v.  Co.,  63  N.  Y.  108. 


§  162  Appraisal  181 

merchants,  the  books  of  the  latter  will  often  furnish  a  check 
upon  his  statements. 

If  the  insured  absents  himself  so  that  he  cannot  with  due 
diligence  be  found,  this  amounts  to  a  refusal  to  be  examined 
on  oath,  and  after  a  partial  examination,  a  refusal  to  continue 
will  have  the  same  effect.^  But  if  the  company  concludes  its 
examination  it  cannot  give  a  fresh  notice,  and  open  up  a  new 
hearing.^ 

Whether  the  conduct  of  the  insured,  upon  the  examina- 
tion, amounts  to  a  disobedience  of  the  injunction  of  this  clause, 
may  be  a  question  of  fact  for  a  jury.^ 

The  company  must  demand  an  examination  within  a 
reasonable  time,  and  must  not  wait  until  an  action  has  been 
brought  against  it  under  the  policy.* 

In  the  examination  the  insured  is  only  bound  to  answer 
such  questions  as  have  a  material  bearing  upon  the  insurance 
and  the  loss.^ 

Logically,  the  sufficiency  of  the  examination,  and  the  rele- 
vancy of  the  questions  asked,  should  be  for  the  court.®  But, 
in  practice,  the  courts  are  very  reluctant  to  dismiss  the  com- 
plaint  on  such  grounds,  and  generally  leave  the  question  of 
reasonable  compliance  to  the  jury,  provided  the  insured  has 
submitted  to  any  sort  of  an  examination. 

The  Massachusetts  policy  contains  no  such  provision. 

§  163.  Appraisal. — In  the  event  of  disagreement  as  to  the 
aTnount  of  loss,  the  same  shall,  as  above  provided,  he  ascertained 
hy  two  competent  and  disinterested  appraisers,  etc. 

This  is  called  the  appraisal  or  arbitration  clause,  and  is 
very  important  to  the  companies  in  many  instances  to  relieve 
them  from  extravagant  or  fraudulent  claims. 

Courts  are  the  legally  appointed  tribunals  for  determining 
controversies,  and  are  jealous  of  interference  with  their  prerog- 

'  Bonner  v.  Home  Ins.  Co.,  13  Wis.  *  Aurora  Fire  Ins.  Co.  v.   Johnson, 

677.     Harris  v.  Phoenix   Ins.  Co.,  35  46  Ind.  315. 

Conn.  310.  ^  Titus  v.  Glens  Falls  Ins.  Co.,  81 

5  Moore  v.    Protection   Ins.  Co.,  29  N.   Y.   410.     Ins.  Co.    v.    Weides,    14 

Maine,  97  :  s.  c,  48  Am.  Dec.  514.  Wall.  375. 

"  Phillips  V.  Protection  Ins.  Co.,  14  '  North  Am.  Life  &  Ace.  Ins.  Co.  v. 

Mo.  220.  Burroughs,  69  Pa.  State,  43 ;  s.   c,  8 

Am.  Rep.  212. 


182  Insurance  :   Fire,  Life,  Marine.  §  169 

atives.  Any  agreement  to  refer  to  arbitration  the  general 
question  of  the  liabihty  of  the  insurers  under  the  pohcv,  or  all 
matters  of  dispute  under  the  policy,  is  void ;  for  it  is  held  to 
be  against  public  policy  to  oust  the  courts  altogether  of  their 
iurisdiction.' 

An  arbitration  clause  providing  that  there  shall  be  two 
arbitrators  and  an  umpire,  without  specifying  expressly  who 
shall  appoint  them,  has  under  a  strict  construction  l)een  held 
invalid.  But  the  provision  of  the  New  York  standard  policy 
which  simply  refers  to  appraisal  tlie  question  of  the  amount  of 
loss,  leaving  any  dispute  in  regard  to  the  company's  liability 
to  be  determined  by  the  courts,  is  valid,  and  a  compliance  with 
it  is  a  prerequisite  to  any  right  of  recovery  in  an  action  upon 
the  policy.*     A  statute  in  Vermont  provides  otherwise. 

By  strict  construction  against  the  company,  it  has  been  held 
that  an  arbitration  clause  somewhat  similar  to  that  in  the 
standard  policy  is  only  applicable  to  property  partially  injured 
and  cannot  be  held  to  cover  property  totally  destroyed.^  Of 
course  the  framers  of  the  policj'^  did  not  intend  to  have  such  a 
distinction  made.  Evidence  relating  to  property  totally  de- 
stroyed can  be  presented  to  arbitrators  as  well  as  to  courts ; 
with  the  difference,  that  juries  are  generally  prejudiced  in  favoi 
of  the  insured,  and  arbitrators  are  likely  to  be  fairly  disinterested. 

If  the  arbitrators  go  outside  the  matters  submitted  to  them 
for  determination,  their  appraisal  will  not  be  binding.'* 

If  the  two  appraisers  agree,  they  may  act  without  calling  in 
the  umpire.^ 

The  Massachusetts  standard  policy  has  an  appraisal  clause 
substantially  the  same,  except  that  it  is  silent  as  to  the  expenses 
of  the  appraisal,  and  provides  that  neither  party  shall  be  re- 

'  Delaware  &  H.  Canal  Co.  v.  Penn.  Uhrig   v.     Williamsburgh    City   Fire 

Coal   Co.,    50    N.    Y.    250.     Reed  v.  Ins.  Co.,  101   N.  Y.   362.     Hamilton 

Washington  Ins.    Co.,  138  Mass.  575.  v.    Home    Ins.    Co.,    13?    U.  S.    370, 

Clement   v.    British   Am.  Assur.  (*o.,  386.    Morley  v.  Ins.  Co.,  85  Mich.  210, 

141    Mass.  298.      Hurst  v.   Litchfield,  but  see  Vermont  R.  L   S  3626 

39  N     Y.    377.     Scott   v.    Avery,    20  =  Rosenwald  v.  Phoenix  Ins.  Co.,  50 

English  Law  &  Eq.  327;  s.  c  ,  5  H.  L.  Hun,  172. 

Cases,  811.  *  Skipper  v.   Grant,  10  ('.  B.  N.  S. 

«  Seward  v.  City  of  Rochester,  109  287. 

N.  Y.  164.      Hamilton  v.   Liverpool,  "  Enright  v.  Montauk  Fire  Ins.  Co., 

L.  &  G.   Ins.  Co.,   136    U.   S.   242.  40  N.  Y.  State  Rep.  642. 


§  164  Pko  Rata  Ci.ause.  183 

quired  to  choose   or   accept   any   person    as  referee  who  has 
served  as  a  referee  in  any  hke  case  within  four  months. 

§  163.  Enforcing   Contract   is  ho   Waiver.— This 

company  shall  not  he  held  to  have  waived  any  'promsion  or'  con- 
dition of  this  policy,  or  any  forfeitui^e  thereof^  hy  any  require- 
ment, etc.,  relating  to  the  appraisal  or  examination  /  and  the  loss  "^ 
shall  not  become  payable  tmtil  sixty  days  after  the  notice  of      -c* 
ascertainment.,   estimate.,   and    satisfactory   proofs    have    been       ^___^ 
received.,  including  an  award  by  appraisers  when  appraisal  has 
been  reguired. 

As  has  been  noticed,  the  courts  in  some  instances  have  been 
disposed  to  construe  as  a  waiver  of  a  known  cause  of  forfeiture 
any  demand  for  an  appraisal  or  examination  of  the  assured  or 
the  appraisal  ;^  but  this  clause  of  the  policy  allows  the  company 
to  pursue  the  contract  methods  for  ascertaining  the  character 
and  extent  of  the  loss  before  exercising  its  option  to  decide 
whether  or  not  it  will  contest  the  claim  of  the  insured.  And 
the  provision  that  the  loss  is  not  payable  until  after  the  award 
by  the  appraisers  makes  it  clear,  under  the  decisions  of  the 
courts,  that  a  compliance  with  the  appraisal  clause  is  not  simply 
directory,  but  is  a  condition  precedent  to  any  right  of  action 
under  the  policy. 

The  Massachusetts  standard  form  does  not  contain  this 
clause. 

§  164.  Pro  Rata  Clause  :  Other  Insurance. — Shall 
not  be  liable  for  greater  proportion  of  any  loss  than  the  amount 
hereby  insured  shall  bear  to  whole  insurance.,  whether  valid  or  — 
not.,  or  by  solvent  or  insolvent  insurers  ;  and  the  extent  of  the     C*" 
application  of  the  insurance  under  this  policy.,  or  of  the  contri-         \ 
bution  to  be  made  by  this  company.,  may  be  provided  for  by        — 
agreement  attached  hereto. 

This  provision  relates  to  double  or  other  insurance  which 
has  been  already  defined,  and  not  to  insurances  of  different 
interests  though  upon  the  same  property.^ 

1  Morley  v.  Ins.  Co.,  85  Mich,  310  55  N.  Y.  222;  s.  c,  14  Am.  Rep.  239. 

(1891).     Hamilton  v.   Home  Ins.  Co.,  Acer  v.  Merchants  Ins.  Co.,  57  Barb. 

137  U.  S.  870  (1890).  -  68.     Titus  v.  Glens  FaUs  Ins.  Co.,  81 

»  McMaster  V.  Ins,  Co.  of  North  Am.,  N.  Y.  415. 


184  Insurance:   Fire,  Life,  Marine.  §  ^^4 

Thus,  if  a  mortgagor  insures  his  interest,  and  a  mortgagee, 
either  by  a  separate  policy  or  by  a  mortgagee  clause  attached 
to  the  mortgagor's  policy,  insures  his  interest  on  the  same 
property,  there  is  no  double  or  other  insurance.  But  if  the 
mortgagor's  policy  is  simply  made  payable  to  the  mortgagee 
without  a  mortgagee  clause,  and  the  mortgagor  should  take 
out  another  policy  upon  the  same  property  and  against  the 
same  risk,  it  would  constitute  a  case  of  double  insurance.' 

The  object  of  this  clause  of  the  policy  is  to  prevent  circuity 
of  action.  Without  it,  in  any  case  of  double  insurance,  as  we 
have  seen,  the  insured  might  bring  his  action  against  any  one 
company  for  the  whole  amount  of  loss  up  to  the  extent  of  the 
policy,  leaving  the  co-insurers  to  settle  their  respective  obliga- 
tions under  the  equitable  doctrine  of  contribution.  But  under 
the  limitation  of  this  clause,  the  insured  can  sue  one  company 
only  for  its  ratable  proportion  of  the  loss,  and  therefore  the 
right  of  contribution  among  the  co-insurers  becomes  available 
to  them  only  in  case  of  over-insurance. 

If  one  company  pays  to  the  insured  either  more  or  less  than 
its  proper  share,  the  other  companies  are  still  liable  to  the 
insured  for  the  amount  of  their  respective  obligations  as  fixed 
by  their  own  contracts  respectively.^ 

When  the  different  policies  contain  similar  terms,  and  are 
concurrent,  there  is  little  difficulty  in  dividing  the  loss  propor- 
tionately among  them ;  but  when  the  policies  cover  in  part  the 
same,  and  in  part  different  property,  and  contain  different  and 
inconsistent  provisions  applicable  to  the  one  loss,  it  may 
readily  be  seen  that  it  is  simply  impossible  to  adjust  the  loss  in 
strict  conformity  to  the  requirements  of  their  repugnant  condi- 
tions. The  problem  of  adjusting  such  losses  often  becomes  one 
of  grave  perplexity  and  difficulty,  and  is  not  always  understood 
by  the  judges,  who,  no  matter  how  learned  they  may  be  in  the 
law,  are  often  insufficiently  familiar  with  the  business  of  insur- 
ance and  the  science  of  mathematics  to  be  able  to  master  the 
situation  even  to  their  own  satisfaction. 

The  Missouri  court,  in  a  case  of  this  character,  summed  up 

'  Hine  v.  Woolworth,  93  N.  Y.  75.  '  Conn.    Fire   Ins.    Co.    v.    Mer.    & 

Van  Alstynev.  Mtna  Ins.  Co.,  14  Hun,  Mech.  Ins.  Co.,  15  Ins.  L.  J.  6:5  (Va. 

360.    Hastings  V.  Westchester  Fire  Ins.  Apl.  15,  1886). 

Co.,  73  N   y.  141. 


§  164  Pko  Kata  Clause.  185 

the  reasons  for  the  conclusion  at  which  it  had  arrived  in  an 
apportionment  of  loss  between  insurance  companies,  in  the  fol- 
lowing Avords :  "  We  are  strengthened  in  this  conclusion  by  the 
fact  that  F.  L.  Ridgely  and  George  K.  McGunnegle,  who  have 
very  great  experience  in  the  business  of  underwriting  in  St, 
Louis,  having  heen  consulted  in  reference  to  this  case,  concurred 
in  recommending  the  same  adjustment."  ^ 

A  practical  insurance  man  has  given  a  number  of  rules, 
more  or  less  inconsistent  with  one  another,  which  have  been 
prepared  by  various  persons  in  the  trade  to  aid  in  arriving  at  a 
proper  adjustment  by  contribution.'^ 

The  same  writer  says :  ''  The  contribution  clause,  like  con- 
tribution under  the  old  form,  is  held  to  be  operative  only 
between  the  companies  in  case  of  double  insurance,  and 
between  policies  containing  it ;  and  then  only  when  the  con- 
current insurance  exceeds  the  general  loss.  .  .  .  The  lia- 
bility of  co-insuring  companies  under  this  clause  is  based  upon 
the  degree  of  concurrency  of  the  policies,  and  is  restricted, 
to  the  ratable  proportions  of  the  loss,  within  the  amount  of  the 
concurrent  insurance ;  though  some  of  the  policies  may  cover 
other  propert}'  in  addition  to  that  destroyed,  or  protect  specific 
items  not  embraced  in  any  of  the  others."^ 

The  questions  arising  under  this  clause  are  so  frequently 
settled  by  the  companies  in  an  amicable  adjustment  that  the 
scope  of  this  book  will  not  admit  of  an  elaborate  discussion  of 
the  subject;  but  certain  principles  may  be  named  which  the 
courts  have  endeavored  to  apply  in  the  settlement  of  inconsist- 
ent provisions  contained  in  the  various  policies. 

1.  The  different  policies  are  placed  as  far  as  possible  upon 
an  equality,  and  special  conditions  and  limitations  in  one  policy 
are  not  brought  over  into  another  ])olicy.* 

2.  The  object  of  the  contribution  clause  is  construed  to  be 
the  restriction  of  the  amount  recovered  from  each  insurer  to 
its  equitable  contributory  share,  and  must  not  be  permitted  to 
operate  so  as  to  reduce  the  aggregate  amount  of  indemnity 
which  the  insured  mio^ht  otherwise  recover.     No  arrangreraent 

'  Angelrodt  v.  Del.  Mut.  Ins.   Co.,  '  Gris wold's  Fire  Underwriters' Text 

31  Mo.  598.  Book,  p.  713. 

'  Griswold's  Fire  Underwriters'  Text  *  Howard   Ins.    Co.    v.    Scribner,    6 

Book,  pp.  745  et  seq.  Hill,  298. 


186  Insurance  :   Fire,  Life,  Marine.  §  164 

of  the  clauses  in  the  pohcy  shall  be  used  to  the  disadvantage 
of  the  insured.  He  must  be  paid,  and  the  dispute,  if  any, 
settled  among  the  underwriters.^ 

Lord  Mansfield  said ',  "In  no  case  must  the  contribution 
clause  be  construed  in  such  a  manner  as  to  throw  loss  upon  the 
insured,  against  which  he  would  have  been  fully  protected  had 
the  policies  been  free  from  that  clause."  '^ 

In  an  interesting  apportionment  by  the  arbitration  commit- 
tee of  the  New  York  Board  of  Fire  Underwriters,  growing  out 
of  a  recent  fire  in  the  Rossiter  stores  in  New  York  City,  the 
arbitrators  laid  down  three  principles  which  they  considered 
fundamental. 

"(1)  That  the  insured  shall  not  suffer  by  non-concurrence 
of  policies,  if  the  aggregate  of  the  insurance  exceeds  the  loss. 

(2)  That  a  co-insurance  clause  serves  its  purpose  if  it  is  a  guar- 
anty that  at  least  the  benefits  of  full  insurance  are  secured. 

(3)  That  a  floating  policy,  with  condition  that  it  shall  not  attach 
until  all  specific  insurance  is  exhausted,  cannot  be  held  by 
reason  of  non-concurrence  of  specific  policies,  save  for  the  excess 
of  the  aggregate  amount  covered  by  all  such  non-concurrent 
policies.'"  ^ 

But  to  constitute  double  insurance  it  is  not  necessary  that 
the  persons  insured  under  the  different  policies  should  be  named 
by  the  same  description.  For  example,  if  a  warehouseman 
takes  out  insurance  upon  the  goods  stored  with  him  as  a  bailee, 
not  only  for  his  own  benefit  but  on  account  of  whom  it  may 
concern,  or  by  any  designation  for  the  benefit  of  others  in- 
terested in  the  same  property,  provided  such  other  persons 
have  either  given  original  authority  for  the  procuring  of  the 
insurance  or  have  subsequently  ratified  it,  the  policy  covers 
their  interest  as  well  as  the  interest  of  the  warehouseman,  it 
being  shown  that  such  other  persons  were  within  the  contem- 
plation of  the  parties  to  the  contract  at  the  time  when  it  was 

'  Lucas  V,  Jefferson  Ins.  Co.,  6  Cow.  Mercantile  Tns.  Co.  v.  L.,  L.  &  G.  Ins. 

635.  Co.,  ry  Ch.   Div.   569.     111.  Mut.   Ins. 

«  Godin  V.  London  Assurance  Co, ,  1  Co.  v.  Hoffman,  133  111.  522.     Balto. 

Burr.  489.  Fire   Ins.    Co.   v.   Loney,   20  Md.   20. 

'  Ogden  V.  East  River  Ins.  Co.,  50  Haley  v.  Dorchester  Mut.  F.  Ins.  Co., 

K.   Y.  388  ;  s.  c,    10   Am.   Rep.  492.  \2  Gray,  545.     Sloatv.  Royal  Ins.  Co., 

Lowell  Mfg.  Co.  V.  Safeguard  Fire  Ins,  49  Pa.  State,  14;  si.  c,  88  Am.  Deo. 

Co.,  88  N.  Y.  591.     North  British  &  477. 


§  1(>5  Standard  Fire  Policy  :    Reinsurance.  187 

made ;  and   in  that  case  a  policy  by  the  owners  or  the  other 
persons  in  interest  will  constitute  other  or  double  insurance.^ 

§  165.  Reinsurance. — LioMlity for  reinsurance  sTiall  he 
as  specifically  agreed  hereon. 

"When  an  insurer  finds  it  prudent  or  convenient  to  protect 
himself  from  loss  by  reason  of  any  liability  he  has  assumed 
under  a  policy,  he  may  contract  with  another  company  to  re- 
lieve him  from  that  liability  by  a  policy  of  reinsurance.  Except 
as  to  the  matter  of  premium,  which  may  be  more  or  less  than 
that  paid  on  the  original  policy,  the  insurer  takes  upon  himself 
the  rights,  duties,  and  obligations  of  the  original  insurer. 

A  company  sometimes  has  all  its  risks  reinsured  by  another 
company  or  other  companies.  A  preliminary  contract  is  gen- 
erally exchanged  providing  that  the  policy  of  insurance  shall 
issue  on  a  certain  date,  and  meanwhile  a  schedule  of  the  risks 
is  prepared  which  is  to  be  attached  to  the  policy  of  reinsur- 
ance. "With  the  exception  of  this  schedule,  which  may  cover 
in  brief  form  thousands  of  policies,  the  policy  of  reinsurance  is 
generally  like  an  ordinary  policy  of  insurance.  It  constitutes 
a  new  contract,  and  is  to  be  governed  by  the  law  of  the  place 
where  it  is  made ;  but  it  is  based  upon  the  representations  made 
at  the  time  of  the  original  insurance.^ 

The  original  insurers  are  governed  by  the  ordinary  rules 
relating  to  concealment,  and  must  make  a  fair  disclosure  to  the 
reinsurers  of  material  facts  concerning  the  risk.^ 

The  statute  of  frauds  is  not  applicable  to  the  contract  of 
reinsurance,  nor  is  it  an  agreement  to  answer  for  the  debt 
of  another,^ 

The  contract  of  reinsurance  is  an  indemnity  against  liability 
for  loss,  and  consequently,  as  soon  as  the  liability  of  the  first 
insurer  has  actuall}^  accrued,  it  may  bring  suit  against  the 
reinsurer  before  an  actual  payment  of  the  loss.  And  so  also 
the  reinsurer  may  be  obliged  to  pay  the  original  insurer  the 
amount  of  its  liability,  although  the  latter  may  have  become 

'  Home  Ins.  Co.  v  Baltimore  Ware-  Co.,   107  U.  S.   485.     N.   Y.   Bowery- 
house  Co.,  93  U.  S.  527.  Fire  Ins.  Co.  v.  N.  Y.  Fire  Ins.   Co., 

5  Cohen  v.  Cont'l   Life  Ins.  Co.,  69  17  Wend.  359. 

"N.  Y.  300.  *  Bartlett    v.  Fireman's  Fund  Ins. 

*  Sun  Mut.   Ins.  Co,  v.  Ocean  Ins.  Co.,  77  Iowa,  155. 


188  Insurance  :    Fike,  Life,   Marine.  §  165 

insolvent,  and  although  it  may  ultimately  be  unable  to  pay  its 
indebtedness  to  the  insured.' 

But  ir,  before  having  recourse  to  the  reinsurer,  the  first 
insurer  pays  or  adjusts  its  loss,  or  compromises  it  so  as  to  fix 
its  araouni,  this  amount  will  limit  its  riglit  of  recovery  against 
the  reinsurer.'^ 

If  the  original  insurer  through  mistake  pays  to  the  insured 
a  larger  amount  than  it  was  bound  to  pay,  the  liabilit}^  of  the 
reinsurer  will  not  be  thereby  increased  unless  the  form  of  the 
contract  of  reinsurance  permits  it,  or  unless  the  amount  paid 
was  fixed  by  a  judgment.  The  original  insured  cannot  bring 
suit  against  the  reinsurer  unless  the  contract  of  reinsurance 
stipulates  that  he  may,  for  otherwise  no  privity  exists  between 
the  original  insured  and  the  reinsurer.^  Any  defense  which  is 
available  to  the  original  insurer  may  also  be  raised  b}'^  the  re- 
insuring company.^  The  provision  of  the  policy  in  respect  to 
other  insurance  is  held  to  mean  other  reinsurance.^ 

Sometimes  policies  of  reinsurance  cover  risks  as  existing  on 
a  certain  date,  and  in  other  policies  the  reinsurers  are  not  care- 
ful to  insert  such  a  limitation.  The  difference  between  these 
two  forms  of  contracts  may  be  very  important.  For  under 
the  first  form,  if  the  original  insurers  or  their  agents  change 
the  risk,  as  frequently  happens,  by  an  express  or  construct- 
ive consent,  for  example,  to  a  removal  of  the  property  to  a 
new  locality,  or  a  change  of  partners,  or  an  assignment  of 
the  policy,  the  reinsurers  will  be  discharged  from  liability. 
Whereas  without  such  limitation  the  reinsurers  would  be 
liable,  notwithstanding  such  waivers  or  privileges  as  the  orig- 
inal insurers  might  see  fit  to  extend  to  the  insured  under  the 
policies.® 

The  practice  is  for  the  original  insurer,  if  sued  by  the  in- 

'  Mutual   Safety  Ins.  Co.  v.  Hone,  Protection    Ins.    Co.,     1    Story,  458. 

2  Comst.  '^35.     Blackstone  v.  Aleman-  Eagle  Ins.  Co.  v.  Lafayette  Ins.  Co.,  9 

nia  F.  Ins.  Co. ,  56  N.  Y.  104.     Gantt  Ind.  443. 

V.    Amer.    Cent.     Ins.     Co  ,    68    Mo.  '  Mutual  Safety  Ins.  Co.  v.  Hone,  2 

503.  Comst.  235. 

"  Insurance  Co.  v.  Insurance  Co  ,  38  '  Manufacturers  Fire  &  Marine  Ins. 

Ohio  State.  11 ;  s.  c,  43  Am.  Rep.  418.  Co.     v.     Western     Assur.     Co.,     145 

'  Glen  V.    Hope  Mut.  Life  Ins.  Co.,  Mass.     4l9.     Faneuil    Hall    Ins.    Co. 

56N.  Y.  379.  v.     L.,    L.    &    Globe    Ins.    Co.     153 

'  N.  Y.    State   Marine   Ins.  Co     v.  Mas,s.  63. 


§  166  Subrogation.  189 

sured,  to  give  the  reinsurer  an  opportunity  to  come  in  and  de- 
fend the  suit  at  the  expense  of  the  latter.  If  the  reinsuring 
company  dechnes  to  do  this,  it  will  be  liable  for  the  reasonab/e 
costs  of  the  suit.^ 

The  provision  of  the  policy,  requiring  an  appraisal  and 
limitino-  the  time  within  which  a  suit  mav  be  brouo^ht,  has  been 
held  to  have  no  application  to  a  contract  of  reinsurance.'' 

The  Massachusetts  policy  is  silent  upon  this  subject. 

§  166.  Hnhrog'tition.—S'ibrogation  of  rights  to  the  extent 
of  paymeyit  shall  be  assigned  to  the  company. 

The   common   law  right  of  subrogation  has  been  already  -^s 
considered.     It  grows  out  of  the  principle  of  indemnity,  and 
has  an  equitable  basis  in  that  the  negligent  person  who  caused 
the  loss  and  who  is  primarily  liable  ought  to  be  made  ultimately 
responsible  for  the  damage  sustained.^ 

The  insured  in  the  first  instance  has  his  option  between  two 
forms  of  remedy.  If  he  pursues  his  remedy  against  the  wrong- 
doer and  recovers  compensation,  the  insurance  company  will 
escape.  But  if  he  chooses  first  to  enforce  his  claim  against 
the  insurance  company,  the  latter  is  entitled,  by  way  of  sub- 
rogation, to  have  recourse  over  against  the  guilty  party  for 
compensation.^ 

Consequently,  the  wise  course  for  the  insured  to  adopt  ordi- 
narily is  to  recover  his  insurance  moneys  in  the  first  instance 
before  instituting  any  suit  against  the  wrong-doer. 

Inasmuch  as  the  insurance  company  is  entitled  to  the  right 
of  subrogation,  the  insured  will  not  be  permitted  to  defeat  that 
right  by  releasing  the  wrong-doer  or  compromising  with  him  to 
the  prejudice  of  the  insurance  company  without  the  consent  of 
the  latter.^ 

The  provision  of  the  policy  requiring  the  insured  to  make  a 
formal  assignment  pro  tanto  of  any  rights  that  he  may  have 

'  N.  Y.  State  Marine  Ins.  Co.  v.  Pro-  *  Liverpool  &  G.  W.    Steam  Co.  v. 

tection  Ins.  Co.,  1  Story,  458.  Phenix  Ins.  Co.,  139 U.  S.  397.     Insur- 

'  Jackson  v.  St.  Paul  F.  &  M.  Ins.  anee  Co.  of  N.  A.  v.  Fidelity,  &c.  Co., 

Co.,  99  N.  Y.  134.     Eagle  Ins.  Co.  v.  123  Pa.  State,  533;  s.  c..  10  Am.  St. 

xJafayette  Ins.  Co.,  9  Ind.  446.  Rep.  546. 

^  Liverpool  &  G.  W.  Steam  Co.    v.  ^  Conn.  Fire  Ins.  (o.  v.  Erie  Ry.  Co., 

Phenix  Ins.  Co.,  129  U.  S.  397.  73  N.  Y.  399  ;  s.  c.,  29  Am.  Rep.  171. 


190  Insurance  :    Fire,  Life,  Marine.  §  16f^ 

against  the  negligent  person  or  corporation  enables  the  insur- 
ance company  without  any  question,  under  the  codes  of  pro- 
cedure, to  institute  action  against  the  wrong-doer  in  their  own 
name.  Insurance  companies,  however,  having  regard  to  the 
prejudice  which  juries  are  apt  to  exhibit  towards  corporations, 
sometimes  make  an  arrangement  with  the  insured  whereby  it  is 
agreed  that  a  suit  shall  be  brought  in  the  name  of  the  insured 
against  the  wrong-doer  for  the  whole  amount  of  damage  sus- 
tained, and  that  the  proceeds  of  the  suit  and  expenses  shall  be 
apportioned  between  the  insured  and  the  insurers  under  some 
stipulated  arrangement.  Sometimes  the  insurance  money  k 
paid  before  the  suit,  and  sometimes  not  until  after  its  termina- 
tion. In  such  a  case  the  insurance  company  does  not  take  any 
assignment.  It  has  been  held  that  the  wrong-doer  who  is 
sued  for  negligently  causing  the  fire  cannot  make  a  defense 
out  of  the  payment  of  the  insurance  money  to  the  insured  by 
the  insurance  company,  because  the  policy  is  res  inter  alios 
acta} 

Except  as  varied  by  express  agreement,  the  insurer  has  no 
rights  against  the  wrong-doer  other  than  those  vested  in  the 
insured,  and  the  company  cannot  enforce  those  until  it  has 
admitted  its  liability  under  tlie  policy.^ 

The  insurers  can  recover  only  what  they  have  paid  under 
the  policy.^ 

Sometimes  the  insurers  take  an  assignment  of  the  whole 
amount  of  the  claim  for  damages  belonging  to  the  insured,  al- 
though this  exceeds  the  amount  paid  on  the  policy.  This  is 
not  equitable,  and  no  company  would  be  apt  to  insist  upon  such 
a  form  of  assignment  if  the  insured  made  objection  to  it. 

A  common  carrier  may,  by  agreement  with  the  owners, 
secure  to  himself  the  benefit  of  any  insurance  effected  by  the 
owner  of  the  goods,  and  in  the  absence  of  fraud  such  an  agree- 

'  Conn.  Fire  Ins.  Co.  v.  ErieRy.  Co.,  Weber  v.  Morris  &  Essex  R.  R.  Co., 

73  N.  Y.  399  ;  s.  c,  29  Am.  Rep.  171.  35  N.  J.  Law,  413  ;  s.  c,  10  Am.  Rep. 

Monmouth  Co.   Mut.   F.   Ins.    Co.  v.  253. 

Hutchinson,  21  N.  J.  Eq.  107.     Hard-  '^  Midland  Ins.  Co.  v.  Smith,  6  Q.  B 

ing  V.  Townshend,  43  Vt.  536  ;  s.  c,  D.  561.     Phoenix  Ins.  Co.  v.  Erie  &  W. 

5  Am.  Rep.  304.     Hayward  v.   Cain,  Tr.  Co.,  117  U.  S.  312  ;  s.  c,  118  U.  8. 

105  Mass.  213.     Monticello  v.  Molli-  210. 

pon,  17  How.  152.     Clark  v.  Wilson,  '  Holbrook  v,  U.  S.,  31  Ct.  of  Claims 

103    Mass.    221;    4    Am.    Rep.   582.  434. 


§  16'7  Proximate  Loss  :    Sprkad  of  Fire.  191 

ment  defeats  any  right  of  subrogation  whicii  otherwise  the  in- 
surers might  have.^ 

If  the  bill  of  lading  provides  that  a  common  carrier  on  /        •   ./» 
incurring  liability  shall  have  the  benefit  of  the  insurance  on  the         i% 
goods,  the  insurer  will  have  no  right  of  suit  by  way  of  subro-    c^a  -* 
gation,  for  the  insurer  can  only  take  such  rights  as  belong  to    /  3  ^  •• 
the  insured  at  the  time  of  loss.^ 

An  agreement  in  a  bill  of  lading  that  the  carrier,  if  he  incurs 
liability  by  loss  or  damage  to  goods,  shall  have  the  benefit  of 
any  insurance  on  them  is  not  within  the  prohibition  of  a  clause 
in  the  policy  against  selling,  transferring,  or  pledging  the  inter- 
est of  the  insured  in  the  policy.^ 

The  mortgagee  clause  gives  to  the  insurer  a  right  of  sub- 
rogation. 

If  the  insured  has  a  contract  right  against  his  lessee  to  make 
good  the  damage  for  which  he  receives  payment  from  the 
insurers,  the  latter,  according  to  the  English  view,  will  be  sub- 
rogated to  that  right.* 

The  Massachusetts  policy  contains  a  subrogation  clause. 

§  167.  Proximate  Loss  :  Spread   of  Fire. — It  not 

infrequently  happens  that  the  fire  which  causes  the  loss  to  the 
property  of  an  insured  person  is  negligently  started  by  a  com- 
mon carrier  or  other  person  on  premises  more  or  less  distant 
from  the  property  of  the  insured.  The  insurers,  upon  paying 
the  loss,  thereupon  become  subrogated  to  the  rights  of  the 
insured  against  the  wrongdoer,  under  the  doctrine  which  has 
just  been  explained. 

The  prosecution  of  these  rights  often  involves  the  difficult 
question,  in  respect  to  the  spread  of  the  fire,  how  far  the  dam- 
ages caused  thereby  are  to  be  attributed  to  the  negligence  of 
the  wrong-doer  as  a  proximate  cause.  The  proximate  cause  is 
the  efficient,  controlling  cause  which  produces  the  effect  with- 
out the  intervention  of  any  new  and  extraordinary  agency. 

'  Mercantile  Mut.  Ins.  Co.  v.  Calebs,        '  Jackson  Co.  v.  Boylston  Mut.  Ins. 

20  N.  Y.  17:3.  Co.,  139  Mass.  508  ;  s.  c,  52  Am.  Rep. 

•>  Piatt  V.  Richmond  Y.  R.  &  C.  R.  728. 
R.  Co.,108N.  Y.  358.    Jackson  Co.  v.       ♦  Darrell  v.   Tibbetts,  5  Q.  B.  D. 

Boylston  Mut.  Ins.  Co. ,  139  Mass.  508  ;  560. 
s.  c,  62  Am.  Rep.  728. 


192  Insurance:   Fire,  Life,  Marine.  §  167 

It  is  to  be  determined  not  so  much  by  any  relationship  of 
propinquity  in  time  or  space,  as  by  the  intimacy  of  connection 
between  the  negligent  act  and  the  resulting  consequences. 
Thus,  results  are  proximate,  whether  to  be  foreseen  or  not, 
which  follow  the  cause  without  any  unusual  disturbance  in  the 
operation  of  the  laws  of  nature.  If  an  efficient,  adequate 
cause  is  found  to  account  for  the  result,  it  must  be  deemed  the 
true  cause,  unless  some  other,  not  incidental  to  it  but  indepen- 
dent of  it,  is  shown  to  have  intervened  between  it  and  the 
result. 

It  is  natural  for  fire  to  spread  so  long  as  there  is  anything 
near  at  hand  to  burn,  and  the  dangerous  character  of  this  ele- 
ment presents  no  excuse  for  imprudence  in  its  use.  Though 
the  number  of  sutferers  from  a  conflagration  may  be  very 
many,  and  the  extent  of  the  damage  very  great,  this  offers 
no  reason  for  shirting  the  burden  of  loss  from  those  who  are 
guilty  to  those  who  are  innocent. 

The  extent  of  proximate  loss  ought  not  to  be  bounded 
by  any  limits  of  ownership,  nor  confined  within  any  arbitrary 
walls,  unless  such  boundaries  are  of  such  a  character  that  they 
must  be  expected  to  prevent  its  extension.  Whether  the 
extent  of  the  loss,  under  all  the  circumstances  of  the  case,  is 
remote  or  reasonably  proximate  is  ordinarily  a  question  for  the 
jury.i 

In  Ryan  v.  N.  Y.  Central  R.  R.  Co.,^  it  was  held  that 
where  a  house  in  a  populous  city  takes  fire  through  the  negli- 
gence of  the  owner  or  his  servant,  and  the  flames  extend  to 
and  destroy  an  adjacent  building  some  one  hundred  and  thirty 
feet  distant,  the  owner  of  the  first  building  is  not  liable  to  the 
owner  of  the  second  buiiding  for  the  damage  sustained  thereby. 

So  far  as  the  Ryan  case  stands  for  the  proposition  that 
where  the  facts,  with  resoect  to  the  question  of  proximate 
cause,  are  sufficiently  plain  they  present  a  question  of  law  for 
the  court,  its  doctrine  has  been  very  recently  approved  by  the 
Court  of  Appeals.^ 

But  as  an  exposition  of  the  law,  applicable  in  general  to 
the  question  of  proximate  loss  by  the  spread  of  fire,  it  is 
opposed  by  the  current  of  judicial  opinion,  and  has  been  so  far 

>  Milwaukee  &c.,  R.  R.  Co.  v.  Kel-        -'  35  N.  Y.  210. 
,  94  U.  S.  469.  "  Read  v.  Nichols,  118  JST.  T.  239. 


y 


%  168  Limit  of  Time  to  Sue.  193 

distinguisned  by  the  courts  of  the  same  State  as  to  have  lost 
much  of  its  author! t3^^ 

The  course  of  reasoning  exhibited  in  the  opinion  of  the 
court  must  have  ha<l  its  origin  in  a  feeling  of  sympathy  in 
view  of  the  momentous  consequences  which  might  be  in- 
volved in  the  negligent  use  of  fire,  rather  than  in  any  sense  of 
justice.^ 

§  168.  Limitation  of  Time    to    Sue. — No  suit  or 
action  shall  he  sustainable  until  after  full  compliance  hy  the 
insured  with  all  the  foregoing  requirements^  nor  unless  com-  ^ 
menced  unthin  twelve  months  next  after  tJte  fire.  ^5 

A  compliance  with  all  the  provisions  of  the  contract  is 
expressly  made  a  condition  precedent.  Without  this  provision, 
it  had  been  said  that  the  appraisal  clause  was  an  independent 
and  collateral  agreement,  and  that  suit  might  be  brought  by  ^ 

the   insured    upon   the   policy    without    complying    with    the  ^ 

requirements  of  the  appraisal  clause.^  ^ 

The  limit  of  one  year  for  bringing  suit  is  valid,  and  must  be  *^ 

observed,  ani  under  the  wording  of  this  clause  tho  twelve 
months  begin  to  run  from  the  time  of  the  fire,"*  and  not  from 
the  time  of  service  of  proofs  of  loss,  which,  under  the 
former  wording  of  the  policy,  was  held  to  be  the  effect  of 
it.5 

A  provision  limiting  the  insured  to  a  particular  place  or 
forum  for  his  action  at  law  would  be  invalid.^ 

The  Federal  Supreme  Court  was  of  opinion  that  the  inter- 
vention of  war  would  override  this  clause  of  the  policy.''' 

The  Massachusetts  clause  names  as  the  limit  of  time  for 
bringing  suit  two  j'ears  from  the  time  the  loss  occurred. 

Some  of  tiie  States  have  passed  statutes  upon  this  subject. 
(See  appendix.) 

'  Webb  V.  Rome  W.  &  0.  R.  R.  Co..  *  King  v.  Watertown  Fire  Ins.  Co., 

49  N.  Y.  42(^.     Tanner  v.  N.  Y.  Cen-  47  Hun.  1. 

tral   Co.,    108  N.    Y.    623.      Hine  v.  '  Steen  v.   Niagara   Fire   Ins.    Co., 

Gushing,  53  Hun,  519.  89  N.  Y.  315;    s.    c.    42   Am.    Rep. 

^  Parley   v.    Eastern  R.  R.  Co..  'J8  297. 

Mass.  418;  s.  c,  96  Am.  Dec.  645.  *  Nute  v.  Hamilton  Mut.   Ins.   Co., 

'  Hamilton  v.   Home  Ins.  Co  ,  187  6  Gray,  174. 

U.  S.  370.     Reed  v.  Washington  Ins.  '  Semmes  v.  City  Fire  Ins.  Co.,  13 

Co.,  138  Mass.  572.  WaU.  158. 
13 


104  Insurance  :    Fire,  Life,  Marine.  §169 

§169.  Mutual  Companies. — If  this  jpolicy  he  made  hy 
a  inutiial  company  having  special  regulations^  such  regulations 
shall  form  a  part  of  the  policy  as  the  same  may  he  vyntten  or 
printed  upon.,  attached  or  appended  hereto. 

The  regulations  or  by-laws  of  mutual  companies  often  affect 
the  particulars  of  the  contract.  These  regulations  are  binding 
upon  the  policy  holders,  who  in  mutual  companies  constitute 
the  members  of  the  company,  and  some  of  the  courts  have  held 
that  they  were  peculiarly  and  conclusively  binding,  to  such  an 
extent  that  even  the  officers  of  the  company  would  have  no 
authority  to  waive  them  where  they  constitute  essential  pro- 
visions of  the  contract.^ 

This  direction  of  the  standard  policy  wisely  and  equitably 
provides  that  such  regulations  must  be  disclosed  in  connection 
with  the  contract  itself. 

This  clause  does  not  appear  in  the  Massachusetts  policy, 
but  the  Massachusetts  public  statutes  and  the  statutes  of  other 
States  provide  that  provisions  of  the  by-laws  or  the  application 
which  form  a  part  of  the  contract  must  be  set  forth  in  the 
policy. 

§  170.  Last  Clause  of  the  Policy — Authority  of 
Agents  to  Waive. — The  importance  of  this  clause  to  the 
insurance  companies  is  illustrated  by  the  frivolous  and  often- 
times false  testimony  by  which,  under  the  doctrine  of  waiver 
and  estoppel,  the  essential  conditions  of  the  written  policy  are 
subverted.  The  provisions  of  the  clause  are  not  invalid  upon 
their  face  or  contrary  to  public  policy,  and  are  to  be  enforced, 
except  as  the  facts  amounting  to  a  waiver  of  the  clause  itself, 
or  to  an  estoppel  against  the  company,  are  clearly  established.^ 

But  the  embarrassing  question  arises  whether  a  clause  which 
provides  for  an  exclusive  method  of  waiver  mav  itself  be  waived 
in  some  other  manner ;  in  other  words,  how  far  the  doctrine 
of  waiver  and  estoppel  derives  its  sanction  from  a  rule  of  law 
independent  of  the  contract  and  superior  to  it.  This  question 
has  already  been  discussed  and  illustrated  by  a  numerous  cita- 
tion of  authorities  in  Chapters  VII.  and  YIII. 

'  Brewer  v.  Chelsea  Miit.  Fire  Ins.  '  Allen  v.  German  Araer.  Ins.  Co.. 
Co.,  14  Gray.  203.  Pitney  v.  Glens  123  N.  Y.  (i  (1890).  Messelbach  t 
Falls  Ins.  Co.,  65  N.  Y.  21.  Norman,  132  N.  Y.  (578  1890). 


§  170  Authority  of  Agents  to  Waive.  195 

The  clause  seems  to  have  been  framed  with  reference  to  the 
ruling-  in  Walsh  v.  Hartford  Fire  Ins.  Co.,^  which  held  that  a 
somewhat  similar  stipulation  in  the  policy  operated  to  curtail 
the  more  ample  ostensible  authority  vested  in  the  agent.  But 
in  that  case  the  agent  was  not  an  officer,  and  the  clause  of  that 
policy  did  not  purport  to  prevent  all  possible  representatives  of 
the  company  from  granting  a  waiver,  nor  was  any  testimony 
adduced  by  the  plaintiff  showing  that  the  company  had  allowed 
its  agent  to  exercise  a  broader  authority  than  that  defined  by 
the  policy. 

This  clause  of  the  standard  policy  is  ingeniously  worded  in 
an  attempt  to  abolish  altogether  the  doctrine  of  parol  waivers 
established  by  law  ;  and  in  a  recent  case,  rightly  decided  upon 
its  facts,  the  New  York  Court  of  Common  Pleas  apparently 
were  of  opinion  that  this  result  had  been  accomplished.^  Such 
also  appears  to  be  the  doctrine  of  the  Massachusetts  court.^ 
But  for  the  reasons  already  given  it  seems  to  accord  better  with 
the  current  of  authority  t(^  say  broadly  that  the  insurers  may, 
in  spiteof  this  contract  stipulation,  effect  an  oral  waiver  through 
their  agent  as  to  this  or  any  other  clause  of  the  policy,  pro- 
vided, as  a  matter  of  fact,  the  agent  has  the  requisite  authority 
as  defined  by  the  relations  existing  between  the  company  and 
himself. 

The  clause  in  question  purports  to  cover  two  points  which 
are  quite  distinct  and  ought  to  have  been  kept  distinct :  (1)  The 
authority  of  the  agent,  which  is  properly  the  subject  of  a  notice 
rather  than  a  stipulation  ;  and  (2)  the  method  of  exercising 
that  authority,  which  it  is  altogether  appropriate  to  incorporate 
into  the  contract  as  one  of  its  conditions. 

The  prevailing  opinion  with  reference  to  the  first  point,  as 
we  have  seen,  appears  to  be  that  such  notice  or  stipulation  is 
not  binding  upon  the  insured  during  the  preliminary  negotia- 
tions or  execution  of  the  application,  unless  it  is  inserted  in  the 
application  itself ;  *  as  to  the  second  point,  it  has  repeatedly  been 

'  73  N.  Y.  5.  *  Kyte  v.  Commercial  Union  Assur. 

'  Hill    V.    London    Assur.    Co.,    16  Co.,  144  Mass.  46. 

Daly,  120  ;  see  also  the  later  well-con-  *  Kister  v.  Lebanon  Mut.  Ins.  Co., 

sidered  opinion  of  Judge  McAdam  in  128  Pa.  St.  553  ;  s.  c,  15  Am.  St.  Rep, 

the  same  case,   in   the  City  *  ourt  of  696. 
New  York,  26  Abb.  N.  C.  203. 


196  Insurance  :    Fire,  Life,  Marine.  §  170 

held  that  it  may  be  waived  by  parol  by  any  representative  of 
the  company  who  has  in  fact  sufficient  authority.  Lately  this 
was  decided  by  the  Second  Department  of  the  Supreme  Court  of 
New  York  upon  a  construction  of  this  identical  clause.' 

The  practical  result  in  New  York  amounts  very  much  to 
this,  that  as  to  the  ordinary  commissioned  or  so-called  general 
agents  of  fire  companies,  the  policy  restriction  or  stipulation 
is  generally  conclusive  evidence  of  their  limited  powers  after  it 
is  received,  so  far  as  effecting  waivers  is  concerned,  inasmuch 
as  in  most  cases  the  insured  is  unable  to  produce  any  testimony 
which  will  avail  to  establish  a  broader  authority  than  that  de- 
fined by  the  policy.  But  in  the  absence  of  special  action  by 
the  directors,  the  officers  of  the  company  are  held  to  have  the 
same  authority,  to  control  and  vary  their  contracts,  which  they 
possessed  before  a  standard  form  of  policy  was  filed  in  Albany 
by  the  committee  of  the  New  York  Board  of  Fire  Under- 
writers.^ " 

This  clause  is  omitted  from  the  Massachusetts  policy,  but  it 
must  be  remembered  that  the  Massachusetts  courts  have  shown 
much  less  indulgence  to  the  insured  in  the  application  of  the 
doctrine  of  waiver  and  estoppel  as  regards  proceedings  whether 
antecedent  or  subsequent  to  the  inception  of  the  contract.^ 

'  Baldwin  v.  Citizens  Ins.   Co.,  60    297.     Ward  v.  L.  &  L.  Fire  Ins.  Co., 
Hun,   389  (lH91),  by  Barnard,    P.   J.    116  N.  Y.  106.       Pechner  v.    Phenix 
See  also  Baumgartel  v.   Prov.   Wash.    Ins.  Co.,  65  N.  Y.  ~07. 
Ins.  Co.,  61  Hun,  118  (1891).  '  Kyte  v.  Commercial  Union  Assur, 

2  Baldwin  v.   Citizens  Ins.   Co.,   60    Co. ,  144  INI  ass.  43.  Batchelder  v.  Queen 
Hun.  389.     Steen  v.  Niagara  Fire  Ins.    Ins.  Co.,  135  Mass.  449. 
Co.,  89  N.  Y.  315  ;  s.  c,  42  Am.  Rep. 

'  Bishop  V.  Agricultural  Ins.  Co.,  180  iJ.  Y.  488.  Berry  v.  American 
Central  Ins,  Co.,  132  N.  Y.  49.  Quinlan  v.  Providence  Washington  Ins.  Co., 
138  N.  Y.  356  (1892). 


CHAPTER  XVI. 

LIFE    INSURANCE   rOLIOT. 

In  life  insurance  there  is  no  standard  form  of  policy,  and 
the  different  companies  use  forms  which  vary  considerably,  and 
which  are  more  or  less  favorable  to  the  insured,  as  the  case 
may  be. 

The  Equitable  of  New  York  has  adopted  a  very  short  form 
of  policy,  which,  after  providing  for  the  payment  of  premium, 
promises  to  pay  the  insurance  moneys  upon  satisfactory  proof 
of  death,  and  recites  that  the  application  is  made  a  part  of  the 
contract.  At  the  foot  it  gives  notice  that  no  person  except  one 
of  the  executive  officers  is  authorized  to  make,  alter,  or  dis- 
charge contracts  or  waive  forfeiture,  and  on  the  back  it  con- 
tains a  list  of  privileges  to  the  insured. 

A  fair  and  convenient  specimen  for  examination  in  detail 
is  the  policy  of  the  Mutual  Benefit  Life  Insurance  Company 
of  New  Jersey,  the  principal  clauses  of  whicli  will  require  our 
consideration  in  this  chapter,  although  it  may  be  premised  that 
the  general  principles  which  govern  the  fire  policy  are  also 
applicable  to  the  life  policy. 

§  171.  The  Beneficiary. — Payable  to  A.  B.^  or  to  his 

executors,  administrators,  or  assigns. 

A  policy  in  this  form  is  the  property  of  the  assured,  is 
subject  to  the  claims  of  his  creditors,  and  upon  his  death  is 
collectible  by  his  executors  or  administrators  like  any  other 
personal  assets  of  his  estate,  unless  he  has  previously  assigned 
the  policy ;  ^  but  oftentimes  the  policy  is  made  payable  to  other 
beneficiaries,  and  frequently  they  are  designated  by  such  in- 
definite terms  that  it  is  not  easy  to  determine  to  whom  the 
description  is  intended  to  be  applicable.^     In  such  a  case  the 

'  Bishop  V.  Grand  Lodge,  112  N.  Y.         ''  \\  alsh  v.  Isl.  L.  lus.  Co.,  133  N.  Y 
1337  (1889).  408  (,189^). 


198  Insurance  :    Fire,  Life,  Marine.  §  171 

words  are  liberally  construed,  and  parol  evidence  is  freely 
received  to  arrive  at  the  real  meaning  of  the  insured.^  In  the 
case  last  cited  in  which  the  policy  was  made  payable  to  the 
"  legal  representatives "  of  the  insured,  the  court  refused  to 
allow  the  proceeds  to  fall  into  the  general  assets  of  the  estate 
for  the  benefit  of  creditors,  and  held  that  the  insured  intended 
to  designate  his  wife  and  children.  And  in  another  case  it 
was  held  that  the  phrase  "  lawful  heirs "  was  used  in  a  col- 
loquial sense  and  might  include  the  widow.'  In  case  of  a 
policy  to  "  my  wife  Mary  and  children,"  a  child  by  a  former 
wife  is  a  beneficiary.^  To  "  be  paid  to  his  wife  M.  K.  and  chil- 
dren," means  to  his  children  by  this  wife  or  others,  not  M.  K.'s 
children/  If  the  policy  is  payable  to  wife  and  children,  they  all 
divide  the  proceeds  equally  and  not  in  accordance  with  the 
statute  of  distributions.'^  Children  born  after  the  contract  are 
included,  unless  the  children  are  specifically  named.*  Any  one 
of  those  named  as  beneficiaries  may  assign  his  expectant  inter- 
est, and  the  assignee  will  take  the  right  to  which  he  was  en- 
titled.' In  order  to  effectuate  the  apparent  intent  of  the  in- 
sured, "child"  was  held  to  mean  an  adopted  child.^  "Children" 
does  not  mean  "grand-children."®  A  designation  of  bene- 
ficiaries can  be  made  only  in  accordance  with  the  charter  and 
b}4aws  of  the  company,  so  far  as  they  may  govern  the  subject.^' 
So,  also,  any  change  of  appointment  must  conform  to  the  regu- 
lations of  the  company ;  but  here,  too,  the  court  will,  so  far  as 
possible,  give  effect  to  the  intention  of  the  parties,  and  will  con- 
sider an  attempted  change  of  beneficiary  complete  without 
undue  regard  to  technicalities."  The  change  of  appointment 
may  be  sustained  without  the  issuance  of  the  certificate  of  in- 
surance.^    Although  the  designation  of  beneficiary  may  be 

>  Griswold  v.  Sawyer,  125 N.  Y.  411.         *  Martin  v,  ^tna  Life  Ins.  Co.,  78 

*  Hannigan  v.  Ingraham,  55  Hun,     Me.  25. 

257.  "  U.  S.  Trust  Co.  v.  Mut,  Ben.  Life 

•McDermott    v.     Centennial    Mut.  Ins.  Co.,  115  N.  Y.  152. 

Life  Asso.,  24  Mo   App.  73.  '"  Sanger  v.  Rotlischild,  133  N.   Y. 

*  Koehler  v.  Centennial  Mut.   Life  577.      Marsh    v.    Amer.    Legion    of 
Ins.  Co.,  66  Iowa,  325.  Honor,    149    Mass.    515.      Britton   v. 

•  Jackman  v.  Nelson,  147  Mass.  300.  Royal  Arcanum,  46  N.  J.  Eq.  102. 

•  Thomas  v.  Leake,  67  Texas,  469.  "  Luhrs  v.  Luhrs,  123  N.  Y,  367. 

'  Conn.  Mut.  Life  Ins.  Co.  v.  Bald-        '«  Bishop  v.  Grand  Lodge,  112  N.  Y, 
win.  16  R.  I.  106.  627. 


§  173  Life  Policy  :    VVakuanties.  199 

irregular,  or  may  altogether  fail,  the  court  will  enforce  the  con- 
tract if  possible  and  not  allow  it  to  fall.'  Statutory  provisions 
permitting  the  insured  to  make  a  new  appointment  are  not 
applicable  where  the  interest  of  the  jBrst-named  beneficiary 
has  become  vested  for  value  paid.^ 

§  173.  Application  Incorporated. — In  consideration 
of  the  statements  in  the  ajpplication  Tnade  a  part  of  this  contract, 
etc. 

This  form  of  words  incorporates  the  representations  of  the 
application  into  the  contract  and  makes  them  express  war- 
ranties.^ 

If  the  alleged  warranty  were  contained  in  the  application 
alone,  and  that  were  not  expressly  made  a  part  of  the  contract, 
it  would  simply  amount  to  a  representation,  inasmuch  as  the 
pohcy  would  in  that  case  supersede  it. 

§  1 73.  Statements  as  to  Health  or  Freedom  from 
Disease. — Health  is  a  relative  term,  for  probably  no  one  is 
altogether  free  from  ailments.  To  violate  a  warranty  of  good 
healtli  it  must  appear  that  the  sickness  was  one  having  a 
tendency  to  shorten  life  or  permanently  impair  the  health  ;  in 
fact,  that  it  amounted  to  a  vice  in  the  constitution.* 

In  answer  to  the  question,  "  Have  you  ever  had  any  diffi- 
culty with  your  head  or  brain  ?"  the  applicant  said  "  No ; "  and 
the  court  decided  that  the  question  called  for  a  functional  or 
organic  derangement,  and  that  periodic  headaches  though  severe 
did  not  constitute  a  ground  for  forfeiture.^ 

Good  health  is  consistent  with  a  touch  of  dyspepsia '  and 
with  a  mere  cold.'' 

A  congestion  or  disorder  of  the  liver  is  not  necessarily  a 
disease  of  the  liver  within  the  meaning  of  the  policy ;  and  in 

1  Addison    v.    New    Eng.    Comml.  N.   Y.  292  ;  36  Am.  Rep.  617.     Ban- 
Travellers'  Assoc,  144  Mass.  591.  croft  v.  Home  Ben.  Asso.,  120  N.  Y. 

'^  Smith  V.  National  Ben.  Soc,  123  14. 

N.  Y.  85.  '  Higbie  v.  Guardian  Mut.  Life  Ins. 

•  Cushman  r.  U.  S.  Life  Ins.  Co.,  63  Co.,  53  N.  Y.  603. 

N.  Y.  404.  •  Morrison  v.  Wis.  Odd  Fellows  Mut. 

*  Peacock  v.  New  York  Life  Ins.  Co.,    Life  Ins.  Co.,  59  Wis.  162. 

20N.  Y.  293.  Grattanv.  Metropolitan  '  Metrop.  Life  Ins.  Co.  v,  McTague, 
Life  Ins.  Co.,  92  N.  Y.  274  ;  s.  c,  80    49  N.  J.  Law,  587. 


200  Insurance  :    Fire,  Life,  Marine.  §  1 7?, 

these  and  similar  cases,  if  the  testimony  leaves  it  in  doubt 
whether  the  disorder  is  a  slight  attack  or  a  permanent  or 
serious  disease,  the  question  is  for  the  jury.' 

So  in  a  case  of  pharyngitis,"^  gastritis,^  bronchitis,'*  Bright's 
disease,^  consumption,®  gout ;  '^  and  the  jury  must  determine 
"whether  a  slight  attack  of  pneumonia  or  sunstroke  is  a  disease  ;^ 
but  in  one  case  an  attack  of  vertigo  was  so  slight  that  the 
court  refused  to  send  the  issue  to  the  jury.^ 

The  fact  that  the  applicant  was  afflicted  with  dyspepsia  six 
months  or  more  before  the  application  was  signed  did  not  make 
untrue  his  statement  that  he  was  not  subject  to  dyspepsia  at 
the  time  of  the  policy.'" 

Where  the  testimony  is  undisputed  that  the  applicant  was 
affected   with  a  certain  disease  or  disorder — as,  for  example, 
rupture  or  tonsilitis — his  statement  to  the  contrary  in  the  appli-      ^ 
cation  is  a  breach  of  warranty,  and  it  would  be  error  to  submit      w 
the  question  to  the  jury."  ^ 

If  the  warranty  is  that  the  assured  has  not  had  spitting  of  2 
blood,  and  the  testimony  shows  that  this  statement  is  not  true,  a*' 
there  is  no  question  for  the  jury.'^  S 

The  insured  said  in  her  application  that  she  was  in  sound 
health.  She  died  of  phthisis  nine  months  after  the  policy  was 
issued,  and  was  sick  three  years  before  her  death.  Held  error 
in  refusing  to  instruct  for  the  company.'^ 

The  answer  "  never  sick,"  made  by  a  German  unfamiliar 
with  our  lanofuaofe,  was  construed  to  mean  that  he  had  never 

1  Cushman  v.  U.  S.  Life  Ins.  Co.,  70  Co.,  v.  Trefz,  104  U.  S.  197.     Moulor 

N.  Y.  72.  V.    Ins.   Co.,   101  U.    S.    708.      Conn. 

"  Mutual  Ben.  Life  Ins.  Co.  v.  Wise,  Mutual  Life  Ins.  Co.  v.  Union  Trust 

34  Md.  582.  Co.,  112  U.  S.  250. 

•  Price  V.  [^hoenix  Mut.  Life  Ins.  Co.,  "Mutual  Benefit   Life   Ins.  Co.   v. 
17  Minn.  4!»7.  Daviess,  87  Ky.  541. 

•  Campbell  v.   New   England  Mut.  '°  World    Mut.     Life    Ins,    Co.    t. 
Life  Ins.  Co.,  98  Mass.  381.  Schultz,  73  111.  586. 

'  C'ontl.  Life  Ins.  Co.  v.  Yung,  113  "  Glutting  v.  Metropolitan  Life,  50 

Ind.  159.  N.  J.  L.  287,     ^tna  Life  Ins.  Co.  v. 

•  Vose  V.  Eagle  Life  &  Health  Ins.  France.  91  U.  S.  510.     Pratt  v.  Dwell- 
Co.,  6  Cush.  43.  ing  House  Mut.  Ins.  Co.,  53  Hun,  103. 

'  Fowkes  V.   Manchester  &  L.    Life       ^'^  Smith  v.  ^tna  Life  Ins.  Co.,  49 

Ins.  Co..  3  Fost.  &  F.  44i».  N.  Y.  vll. 

"  Boos  V  World  Mutual  Life  Ins.  Co.,        ''Metropolitan    Life     Ins.    Co,    v 

64  N.  Y,  236.     KuicLerbocker  Life  Ins,  Dempsey,  72  Md,  288. 


:J 


§  175  Life  Policy  :    Warranties.  ^Ol 

had  any  of  the  hst  of  diseases  enumerated  in  the  apphca- 
tion.' 

§  174.  Statements  as  to  Medical  Attendance. — 

If  the  applicant  names  a  doctor  as  his  attending  physician,  this 
may  not  avoid  the  policy  although  the  physician  is  not  the 
usual  medical  attendant,  for  the  statement  may  still  be  true.'^ 

And  the  question  as  to  the  truth  of  the  statement  in  regard 
to  the  medical  attendant  or  usual  medical  attendant  or  family 
physician,  if  the  testimony  is  in  doubt,  is  for  the  jury.^ 

But  medical  consultation  or  treatment  means  for  the  pur- 
pose of  procuring  or  furnishing  medical  aid,  and  not  necessarily 
for  a  specific  disease ;  and  giving  medicine  by  a  physician  to 
relieve  suffering  is  prescribing  medicine  within  the  meaning  of 
an  application.* 

And  if  on  the  undisputed  testimony  the  answer  is  untrue, 
the  court  must  dismiss  the  complaint.^ 

In  one  case  the  question  was,  "  Name  and  residence  of  fam- 
ily physician  ?  "  and  the  answer  was,  "  Refer  to  Doctor  Corn- 
ing." The  proofs  showed  that  Doctor  Corning  was  not  the 
physician  of  the  insured,  but  the  court  held  that  upon  this 
ambiguous  form  of  response  it  was  proper  to  leave  the  question 
of  forfeiture  to  the  jury.^ 

The  insured  stated  in  the  application  that  he  had  had  no 
medical  attendance  within  the  year.  A  physician  testified  that 
he  had  attended  him  and  prescribed  for  him  within  that  time 
in  the  presence  of  certain  members  of  the  family,  who  testified 
that  they  had  no  recollection  of  it.  Held,  that  the  question  of 
breach  was  for  the  jury.'' 

§  175.  Statements  as  to  Other  Insurance. — In- 
quiry is  sometimes  made  in  the  application  upon  this  point,  and 

'  Knickerbocker    Life   Ins.    Co.    v.  *  Cobb  v.  Covenant  Mutual  Benefit 

Trefz.  1(14  U.  S.  197.  Assn.,  153  Mass.  176  (1891). 

2  Cushman  v.  U.  S.  Life  Ins.  Co.,  70  '  Phillips   v.   New  York  Life,  9  N. 

N.  Y.  72.  Y.  Suppl.  839. 

"  Gibson  v.  Amer.  Mut.  L.  Ins.  Co.,  '  Hi^gins  v.  Phoenix  Mut.  Life  Ins. 

87  N.  Y.  580.      O'Hara  v.  U.  B.  Mut.  Co.,  74  N.  Y.  6. 

Aid  Soc,  134  Pa.  St.,  417.     Edington  '  O'Hara  v.  United  Brethren  Mut- 

V.  Mutual  Life  Ins.  Co.,  67  N.Y.  lyS.  ual    Aid    Society,    134    Pa.     State, 

Huckman  v.  Fernie,  3  M.  &  W.  505.  417. 


202  Insurance:    Fire,  Life,  Marine.  §  176 

it  is  a  matter  of  special  importance  to  tiie  company  wliere  the 
character  or  financial  condition  of  the  applicant  is  suspected. 
A  deceptive  or  misleading  disclosure  or  concealment  upon  this 
subject  will  be  fatal.* 

§  176.  Statements  as  to  Age. — The  rate  of  premium 

being  based  upon  the  age  of  the  insured,  it  is  quite  mate- 
rial that  the  response  to  this  question  should  be  correct. 

The  policy  was  held  void  where  the  applicant  erroneously 
represented  his  age  to  be  fifty-nine  instead  of  sixty-four.* 
And  where  the  true  age  was  thirty-five  and  the  application 
represented  it  to  be  thirty,  it  was  held  to  be  a  material  vari- 
ation.^ 

But  this  requirement,  like  all  others,  may  be  waived,  or  the 
company  may  be  estopped  from  taking  advantage  of  the  mis 
take." 

§  177.  Statements  as  to  Family  Relationship. — 

The  untrue  statement  of  the  applicant  that  he  was  a  widower 
was  held  to  be  fatal  to  a  recovery  under  a  policy.^ 

A  breach  of  the  warranty  that  the  insured  was  a  single 
man,  when  in  reality  a  married  man,  forfeited  the  policy,  al- 
though the  risk  was  not  thereby  increased.® 

But  the  erroneous  statement  by  the  applicant  that  the 
person  named  in  the  policy  as  beneficiary  was  a  cousin  of 
the  applicant,  was  considered  too  trivial  to  vitiate  the  con- 
tract.' 

§  178.  Habits. — The  statement  that  the  applicant  is  of 
temperate  habits  does  not  mean  that  he  totally  abstains  from 
drinking  wines  or  liquors.^ 

'  London  Assurance  v.   Mansel,  11  Co.,  107  N.  Y.  292.     O'Brien  v.  Home 

L.  R.,  Ch.  Div.  363.     Clapp  v.  Mass.  Ben.  Soc,  117  N.  Y.  310. 

Ben.  Assoc,  146  Mass.  519.     Edington  *  United  Brethren  Mut.  Aid  Soc.  v. 

V.  ^tna  Life  Ins.  Co.,  77  N.  Y.  564  ;  White,  100  Pa.  State,  12. 

8.  c,  100  N.  Y.  536.  '  Jeffries  v.  Life  Ins.  Co.,  22  Wall. 

"  Swett  V.  Citizens'  Mut.  ReUef  So-  47. 

ciety,  78  Me.  541.  '  Britton  v.  Royal  Arcanum,  46  N. 

*  ^tna  Life  Ins.  Co.  v.  France,  91  J.  Equity,  102. 

U.  S.  510.  *  Van  Valkenburgh  v.  Amer.  Popu- 

*  Miller  v.  Phoenix  Mut.  Life  Ins.    lar  Life  Ins.  Co  ,  70  N.  Y.  605. 


§  180  Life  Policy  :    Warrajjties.  203 

A  statement  of  habits  is  of  a  fact,  and  not  of  an  opinion.^ 
In  any  case  of  doubt,  the  question  of  habits  must  go  to  the 

jury.'  try 

And  the  United  States  Supreme  Court,  with  what  would 
seem  to  be  an  over-indulgence  to  the  insured,  expressed  the 
opinion  that  a  man  might  have  the  delirium  tremens  once, 
without  necessarily  violating  this  warranty.^  The  English 
court  thought  this  was  too  liberal.'* 

§  179.  Statements  as  to  Occupation. — Where  the 
applicant  warranted  that  he  was  a  soda-water  maker,  and 
was,  in  fact,  a  soda-water  seller,  it  was  held  to  be  no  breach  of 
"Warranty.^  But  the  statement  being  a  warranty,  it  must  be  in 
effect  true,  or  the  policy  will  be  avoided.® 

§  180.  Statements  or  Requirements  as  to  Resi- 
dence and  Travel. — If  these  are  restrictions  contained  in 
the  policy,  they  must  be  complied  with  ;  ^  and  if  statements  in 
the  application,  they  must  be  true. 

The  settled  limits  of  the  United  States,  means  within  the 
bounds  of  the  Union,  and  not  the  portions  of  the  country  that 
are  thickly  settled.^ 

If  a  permit  is  given  to  travel  by  a  particular  route  or  to 
remain  in  a  hazardous  region  for  a  particular  time,  the  limitation 
must  be  strictly  obeyed.*  An  inability  to  return  will  be  no  ex- 
<3use.^°  And  a  subsequent  receipt  of  the  money  by  the  company, 
without  knowledge  of  the  forfeiture,  will  not  revive  the  policy." 

'  Thomson  v.  Weems.  9  App.  Cas.  Co.,  80  N.  Y.  292;  s.  c,  36  Am.  Rep. 

686.  617.     Kenyon  v.  Knights  Templar  & 

'  Meacham  v.  N.  Y.  State  Mut.  Ben.  M.  Mut.  Aid  Assoc,  122  N.  Y,  247. 

Assoc,    120   N.    Y.   237.       Pelton  v.  °  Dwight  v.  Germania  Life  Ins.  Co., 

Westchester  Fire  Ins.   Cc,  77  N.  Y.  103  N.  Y.  341. 

605.     ^tna  Life   Ins.   Co.  v.    Davey,  '  Nightingale  v.  State  Mut.  Life  Ins. 

123  U.  S.  739.     Northwestern  Life  Ins.  (^o.,  5  R.  I.  38. 

Co.  V.  Muskegon  Bank,  122  U.  S.  501.  '  Casler  v.  Conn.  Mut.  Life  Ins.  Co., 

Miller    v.     Mutual  Ben.   Ins.  Co.,  34  22  N.  Y.  427. 

Iowa.  222.  »  Hathaway  v.  Trenton  Mut.  L.  &  F. 

•  Insurance  Co.  v.  Foley,  105  U.  S.  Ins.  Co.,  11  Gush.  448. 

850.  •»  Evans  v.    TJ.  S.  Life  Ins.  Co.,  64 

•  Thomson  v.  Weems.  9  fApp.  Cas.    N.  Y.  3U4. 

886.  "  Beunecke  v.  Insurance  Co.,   105 

•  Grattan  v.  Metropolitan  Life  Ins.    U.  S.  355. 


204  Insurance:    Fire,  Life,  Marine.  §181 

But  the  company  or  its  representative  may  waive  the  re- 
quirements of  the  policy.^ 

Where  an  EngHsh  poHcy  required  notice  to  the  directors, 
and  written  consent  to  visit  a  foreign  country,  it  was  held  that 
notice  under  the  policy  to  an  agent  of  the  company  was  suffi- 
cient, where  the  agent,  for  several  years  afterwards,  collected 
the  premiums  and  remitted  them  to  the  company,  although  he 
had  not  express  authority  to  waive  the  contract  conditions.^ 

§  181.  Statements   about    Bodily  Iiyuries. — The 

rule  of  construction  is  very  similar  to  that  applicable  to  state- 
ments concerning  health.  A  temporary  or  trivial  injury,  of 
which  no  permanent  effects  remain,  is  not  a  serious  personal 
injury,  and  what  is  serious  under  the  testimony  of  most  cases 
would  be  made  a  question  for  the  jury.^ 

A  cut  from  which  a  little  blood  flows,  is  not  a  hurt  or  a 
wound.^ 

And  the  omission  to  recollect  a  temporary  injury  to  an  eye, 
caused  by  sand  which  was  thrown  into  it  and  inflamed  it,  was 
not  considered  necessarily  fatal  to  the  policy  where  the  appli- 
cant had  answered  in  the  negative  the  question  whether  he 
had  ever  had  any  illness,  local  disease,  or  injury  in  any  organ.^ 

'  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  *  Bancroft  v.  Home  Ben.  Assoc,  120 

23  Conn.  244.  N.  T.  14. 

■^  Wing  V.   Harvey,  5  DeG.  M.  &  G.  "  Fitch  v.   Amer.  Popular  Life  Ins. 

265.  Co.,  59  N.  Y.  557. 

•  Ins.  Co.  Y.Wilkinson,  13  WaU.  223. 


CHAPTER   XYII. 


LIFE    POLICY CONTINUED. 


§  182.  Payment  of  Premiums. — The  policy  to  cease 
unless  premiums  paid,  when  due,  at  the  home  office,  and  upon 
production  of  receipts  signed  l)y  president  or  treasurer,  and 
policy  not  to  take  effect  until  first  premium  actually  paid. 

The  payment  of  the  premium  is  of  the  essence  of  the 
contract,  and,  in  fact,  constitutes  all  that  the  company  receives 
under  the  contract,  and  a  failure  to  pay  on  or  before  the  days 
named  will  avoid  the  policy  unless  the  company  is  in  some 
way  responsible  for  the  omission,  or  waives  it.^  Punctuality  in 
payment  is  essential.* 

So,  also,  if  the  premium  is  paid  by  a  note,  and  the  policy 
provides  for  forfeiture  upon  non-payment  of  the  note,  no  relief 
can  be  granted  in  case  of  breach.^ 

A  local  agent  has  no  authority,  simply  by  virtue  of  his 
position,  to  receive  anything  but  cash.^  But  if  he  is  intrusted 
with  the  closing  of  the  contract  by  delivering  the  policy,  accord- 
ing to  the  better  opinion  he  has  an  implied  authority  to  decide 
how  the  premium  then  due  may  be  paid.^ 

This  authority  to  waive  contract  provisions  as  to  the 
method  of  paying  the  first  premium  does  not  extend  to  sub- 
sequent premiums,  except  as  the  plaintiff  can  show  authority 
in  the  agent  emanating  from  the  insurers,  either  express 
instructions,  or  a  known  practice  of  the  agent  sanctioned  by 
the  company.* 

'  Klein    v.    Ins.    Co.,    104    U.    S.  Y.  St.  Rep.  573.     Acey  v.  Femie.   7 

88.  M.  &  W^.  151. 

5  Holly  V.  Metrop.  Life  Ins.  Co.,  105  "  Critchett  v.  Am.  Ins    Co.,  53  Iowa 

N.  Y.  437.  404;  s.c.  36  Am.  Rep  2;50.     Boehenv. 

•Knickerbocker    Life    Ins.    Co.    v.  Williamsburgh  Ins.  Co.,35N.  Y.  131. 

Pendleton,  112  U.  S.  696.  "  McAllister  v.  New  Eng.   Mut.  Life 

«  Raub  V.  N.  Y.  Life  Ins.  Co.,  14  N.  Ins.  Co  .  101  Mass.  558. 


"^V 


20()  Insurance  :    Fire,  Life,  Marine.  §  183 

The  president  or  secretary  of  the  company,  however,  may 
waive  a  forfeiture  for  non-payment  of  premium,  or  give 
credit,  although  the  terms  of  the  pohcy  forbid  it.^ 

And  the  plaintiff  is  at  liberty  to  show,  as  matter  of  fact, 
if  he  can,  that  the  company  has  given  the  agent  sufficient 
authority  to  waive  this  or  any  condition  of  the  contract.^ 

If  the  previous  course  of  dealing  between  the  company  and 
the  insured  warrants  it,  payment  may  be  by  check  instead  of 
cash.^ 

Where  the  beneficiaries  named  in  a  life  policy  had  no 
knowledge  of  the  existence  of  the  policy,  which  had  been 
fraudulently  surrendered  to  the  company  by  the  insured  before 
his  deatli,  the  court  decided  that  there  was  a  valid  excuse  for 
the  non-payment  of  premiums/ 

But,  in  general,  as  we  have  already  seen,  sickness,  paralysis, 
or  other  inability  to  comply  with  the  terms  of  the  contract 
furnishes  no  excuse,^  but  the  receipt  and  retention  of  the  pre- 
mium at  the  home  office  constitutes  a  waiver  of  any  informal- 
ity in  the  method  of  payment,  and  also  of  all  known  breaches 
of  the  policy.^ 

§  183.  Assessments. — In  mutual  companies  the  pre- 
miums are  often  paid  in  the  form  of  assessments,  and  it  is 
customary  on  the  happening  of  the  loss  to  call  for  an  assess- 
ment with  which  to  meet  it.  Notice  of  the  time  and  place  of 
payment  is  given  by  the  company." 

The  jury  determines  whether  or  not  the  notice  has  been 
received.  If  not  received  there  is  no  forfeiture,^  unless  the 
policy  provides  that  sending  or  mailing  of  the  notice  is  suffi- 
cient.'' 

'  Dilleber    v.     Knickerbocker     Life  ^  School     District    v.    Dauchy,    25 

Ins.   Co.,  76   N.    Y.  567.     Church  v.  Conn.  530. 

Lafayette    Fire   Ins.    Co.,    66    N.    Y.  "  Rice  v.  New  Eng.  Mut.  Aid  So., 

222.  146  Mass.  248.     McGurk  v.  Met.  Life 

^  Wyman  v.  Pliojnix  Mut.  Life  Ins.  Ins.  Co.,  56  Conn.  528. 

Co.,  119  N.  Y.  274.     Van  Schaick  v.  'Covenant    Mut.     Ben.    Assoc,     v. 

Niagara  Fire  Ins.    Co.,   68  N.  Y.  at  Spies,  114  111.  463. 

439.  "  McCorkle  v.  Texas  Ben.  Assoc.,  71 

'  Kenyon  v.  Knights  Templar  &  M.  Tex.  149. 

Mut.  Aid  Assoc,  122  N.  Y.  247.  "  Union  Mut.  Ace.  Assoc,  v.  MUler, 

*  Whitehead  v.  N.  Y.  Life  Ins.  Co.,  26    111.    App.  230.      Yoe  v.  Howard, 

102  N.  Y.  143.  &c.,  Ben.  Assoc,  63  Md.  86. 


§  184  Suicide.  207 

§  184.  Suicide. —  Exemption  of  insurers  froin  liahility 
for  suicide^  sane  or  hisane. 

The  insurer  is  still  liable,  in  spite  of  this  clause,  where  the 
death  is  purely  accidental  without  any  intent  to  commit 
suicide.^ 

Where  the  insured  is  named  as  beneficiary,  a  criminal  act 
of  suicide  or  a  death  by  hanging  would  vitiate  the  contract 
without  any  express  provision,  inasmuch  as  a  contract  of  insur- 
ance presupposes  good  faith. ^ 

Though  a  recent  writer  on  life  insurance  suggests  the 
contrary  view.^ 

But  if  the  interest  in  the  policy  is  vested  in  other  benefici- 
aries, and  the  contract  is  valid  at  the  time  when  it  was  entered 
into,  the  guilty  act  of  the  insured  does  not  vitiate  it  to  the 
prejudice  of  the  beneficiaries.* 

If,  however,  the  insured  took  out  the  policy  with  the  guilty 
intent  of  committing  suicide,  the  contract  would  be  void 
ah  iiiitio.^ 

So,  also,  if  the  beneficiaries  intentionally  compass  the 
death  of  the  insured  after  the  policy  is  taken  out,  they  can 
recover  nothing  upon  it.^ 

Frequently  in  life  policies,  and  almost  invariably  in  accident 
policies,  there  is  a  provision  that  the  companj^  shall  not  be 
liable  in  case  the  injuries  named  are  self-inflicted,  or,  as  it  is 
often  worded,  if  the  insured  dies  by  "  suicide,"  or  "  by  his  own  "  -^ 
hand,"  or  "  takes  his  own  life,"  which  have  been  held  to  be 
equivalent  forms  of  expression,'^ 

The  proper  meaning  of  the  suicide  clause,  where  the  words 
"  sane  or  insane  "  do  not  form  a  part  of  it,  has  been  the  subject 

'  Phillips  V.  La.  Equitable  Life  Ins.        '  Cooke  on  Life  Ins.,  Sec.  41. 
Co.,  26  La.  Ann    404  ;  s.  c,  21  Am.        *  Darrow  v.  Family  Fund  Society, 

Rep.  549.     Equitable  Ijife  Assur.  Soc.  116   N.    Y.    5y7  ;   s.    c,    15    Am.    St. 

V.  Paterson,  41  Ga.  338.     Knights  of  Rep.  430.     Fitch  v.  American  Popular 

Golden    Rule   v.    Ainsworth,  71    Ala.  Life  Ins.  Co.,  59  N.  Y.  557  ;  s.  c,  17 

436.     Lawrence  v.  Mutual    Life   Ins.  Am.  Rep.  372. 
Co.,  5  Bradw.  (111.)  280.  '  Smith  v.    National    Benefit  Soc, 

2  Knights  of  Golden  Rule  v.  A  ins-  123  N.  Y.  85. 
worth,    71     Ala.    436.      Hartman    v.        "  Prince  of    Wales,  &c  ,    Assoc,    v. 

Keystone  Ins.  Co.,  21  Pa.  State,  466.  Palmer.  25  Beav.  605. 
Manhattan  Life  Ins.  Co.    v.    Brough-       '  Accident  Ins.  Co.  v.  Crandal,  120 

ton,  109  U.  S.  121.  LT.  S.  527. 


O 


«rt 


208  Insurance:    Fire,  Life,  Marine.  §  184 

of  much  discussion  b}^  the  courts,  which  is  traced  historically 
at  great  length  in  May  on  Insurance.^ 

Where  the  exemption  from  liability  is  simply  death  from 
suicide  or  other  equivalent  form  of  expression,  without  the 
words  "sane  or  insane,"  it  has  been  held  that  tlie  exception 
does  not  avail  the  insurers  as  a  defence  if  it  appears  that  the 
assured  was  devoid  of  reason  when  he  took  his  life.  This  con- 
clusion is  put  upon  the  ground  that  an  act  beyond  the  control 
of  the  assured  is,  in  effect,  nothing  but  an  accident.  As  to  the 
degree  of  insanity  which  will  operate  in  such  a  case  as  an 
/  excuse  to  the  insured  to  prevent  the  application  of  the  excep- 
\^  tion,  two  rules  have  been  laid  down.  The  English,  New 
n  York,  and  Massachusetts  courts,  and  others,  have  adopted  the 
view  that  to  take  a  case  out  of  the  proviso  of  the  policy  on  the 
ground  of  insanity  the  assured  must  have  been  so  mentally 
disordered  as  not  to  understand  that  the  act  he  committed 
would  cause  his  death,  or  he  must  have  committed  it  under  the 
influence  of  some  uncontrollable  insane  impulse.  These  courts 
hold  that  it  is  not  sufficient  to  show  that  his  mind  was  so  im- 
paired that  he  was  not  conscious  of  the  moral  obliquity  of  the 
<^  act.2 

«^  The  United  States  Supreme  Court  and  others  following  its 

^  authority  have,  on  the  contrary,  defined  the  rule  as  follows : 

^^^  "  This  court  on  full  consideration  of  the  conflicting  authorities 

\  upon  that  subject  has  repeatedly  and  uniformly  held  that  such 

a  provision,  not  containing  the  words  '  sane  or  insane,'  does 

not  include  a  self-killing  by  an  insane  person,  whether  his  un- 

•y        soundness  of  mind  is  such  as  to  prevent  him  from  understand- 

^t^  ing  the  physical  nature  and  consequences  of  his  act  or  only 

s5  such  as  to  prevent  him,  while  foreseeing  and  premeditating  its 

physical  consequences,  from  understanding  its  moral  nature 

and  aspect."/ 

The  distinction  between  these  two  rules  of  law  is  probably 
too  metaphysical  to  make  it  of  any  practical  consequence 
whether  the  jury  is  charged  in  terms  of  the  one  or  in  terms  of 
the  other, 

'  Chapter  XV.  Ins.  Co.,  103  Mass.  227  ;  s.  c,  3  Am. 

»  Van  Zandt  v.  Mutual  Benefit  Life  Rep.  451. 

Ins.  Co.,  55  N.  Y.  169  ;  s.  c,  14  Am.  '  Ace.  Ins.  Co.  v.  CrandaL  12Q  U.  S. 

Rep.  215.    Borradaile  v.  Hunter.  5  M.  531,     Bigelow  v.  Berkshire  L.  Ins.  Co., 

&  a.  639.     Cooper  v.  Mass.  Mut.  Life  98  U.  S.  284  ;  s.c,  19  Am.  R.  628,  note. 


§  185  YioLATioN  OF  Law. 

To  secure  the  benefit  of  the  restriction,  which  it  is  hardly 
necessar}'  to  say  was  really  intended  to  be  secured  by  the 
earliei-  forms  of  expression,  tlie  insurers  have  generally  added 
to  the  suicide  clause  the  words  "sane  or  insane,"  and  with  this 
addition  the  exemption  covers  all  cases  of  intentional  self- 
destrucLioii.  The  insurers  are  thus  relieved  from  responsibility, 
unless  the  death  of  the  insured  was  purely  accidental.^ 

In  one  case  it  was  held,  by  a  strict  construction  against  the 
insurers,  that  the  taking  of  poison  through  mistake  or  igno- 
rance would  not  avoid  the  policy,  although  the  words  of  the 
suicide  exception  clause  were,  whether  "  voluntary  or  other- 
wise," instead  of  "sane  or  insane"  ;  which  forms  of  expression 
the  court  regarded  as  synonymous.^ 

If  the  compan}''  sets  up  the  defence  of  suicide,  the  burden  of 
proof  rests  upon  it,  and  if  the  facts  are  equally  susceptible 
of  either  construction,  it  will  be  presumed  that  death  was  the 
result  of  an  accident  and  not  of  a  criminal  intent.^ 

But,  on  the  other  hand,  every  man  is  presumed  to  be  sane, 
and  the  burden  of  proving  insanity  is  on  him  who  alleges  it, 
and  the  fact  of  suicide  is  not  of  itself  sufficient  to  establish 
it.* 

Missouri  has  adopted  a  statute  that  suicide  will  not  avail  as 
a  defense. 

§  185.  Exception  of  Death  by  the  Hands  of  Jus- 
tice or  in  Violation  of  Law. — This,  though  similar  to  the 
last  clause,  is  considered  distinct  from  it.^ 

In  the  Cluflf  case  it  was  held  that  a  forcible  taking  of 
property  under  the  ill-founded  claim  of  legal  right  was  not  a 
violation  of  this  clause,  which  is  generally  confined  to  those 
cases  in  which  the  act  is  known  to  be  a  violation  of  law ;  and 
by  the  better  view  the  clause  is  further  confined  to  cases  of  vio- 
lation of  criminal  law%  in  which  the  violation  of  law  and  the 

'  De  Gogorza  v.  Knickerbocker  Life       *  Weed  v.  Mutual  Benefit  Life  Ins. 
Ins.  Co.,  65  N.  Y.  232.  Co.,  70  N.  Y.  561.     McChire  v.  Mutual 

'  Penfold  V.  Universal  Life  Ins.  Co.,    Life  Ins.  Co.,  55  N.  Y.  651.     MeachanA 
85  N.  Y.  817;  s.  c,  39  Am.  Rep.  660. /V.  N.  Y.  State  Mutual  Benefit  Assn.,  J 

•  Malloiy  V.  Travellers'  Ins.  Co.,  47\120  N.  Y.  2;!7. 
N.  Y.    52  ;    s.    c,  7  Am.    Rep.    410.        "  Clufif  v.  Mutual  Benefit  Life  In$. 
TraveUers'  Ins.  v.  McConkey,  137  U.  S.    Co.,  13  Allen,  308. 
661. 

14 


210  Insurance  :   Fire,  Life,  Marine.  §  1?'^ 

act  causing  death  are  a  part  of  one  and  the  same  continuous 
transaction. 

Thus  where  the  insured  met  his  death  by  being  shot  by  a 
person  with  whose  property  he  was  interfering,  it  was  held  that 
this  clause  of  the  policy  would  not  avail  the  insurer  as  a 
defense.* 

But  where  the  insured  was  killed  by  a  shot  fired  in  provo- 
cation caused  by  an  affray  that  had  ended,  a  judgment  in  favor 
of  the  insurer  was  sustained  on  the  ground  that  if  the  acts  of 
the  insured  were  such  as  to  produce  in  his  slayer  a  high  degree 
of  passion,  and  while  he  was  in  such  a  state  he  shot  and  killed 
the  insured,  the  death  was  the  natural  consequence  of  the 
assault.* 

Where  the  insured  was  engaged  in  the  lawful  defense  of 
his  person,  there  being  reasonable  cause  to  apprehend  a  design 
to  do  him  personal  injury,  the  exemption  clause  was  held  to 
furnish  no  defense  to  the  insurers.' 

But  the  death  was  held  to  be  "  in  the  known  violation  of 
the  law"  where  the  insured  died  within  a  few  hours  from 
wounds  inflicted  by  the  husband  of  a  woman  upon  whom  he 
was  committing  assault  and  battery.* 

§  186.  Authority  of  Agents. — Agents  not  mithorized 
to  make^  alter,  or  discharge  this  or  any  other  contract  in  rela- 
tion to  the  matter  of  this  hisurance,  or  to  waive  aiiy  forfeiture 
hereof.,  or  to  grant  jpertnits.,  or  to  receive  for  cash  due  for  pre- 
miums anything  hut  cash. 

The  effect  of  this  clause  has  been  discussed  under  the  sub- 
ject of  general  principles,  in  Chapters  YII.  and  VIII. 

As  was  observed  in  the  introductory  chapter,  there  is  ordi- 
narily nothing  in  the  usual  course  of  business,  as  transacted  by 
the  local  agents  of  life  insurance  companies,  from  which  any 
one  dealing  with  them  has  the  right  to  infer  that  they  possess 
any  authority  to  make  or  unmake  a  policy,  or  to  alter  its 
terms,  except  in  some  instances  in  regard  to  the  method  of 

'  Bradley  v.  Mutual  Benefit  Life  Ins.  '  Overton  v.  St.  Louis  Mutual  Life 

Co.,  45  N.  Y.  433;  s.  c,  6  Am.  Rep.  Ins,   Co.,  39  Mo.  122;  s.  c,   90  Am. 

116.  Dec.  455. 

«  Murray  v.  N.  Y.  Life  Ins.  Co.,  96  *  Bloom  v.  Franklin  Life  Ins.  Co.,  97 

N  Y.  614 :  s.  c,  48  Am.  Rep.  658.  Ind.  478  ;  s.  c,  49  Am.  Rep.  469. 


§  188  Assignments.  211 

paying  premiums.'  But,  as  we  have  also  seen,  the  agent  may, 
by  his  conduct  in  connection  with  the  execution  of  the  written 
application,  estop  the  company  where  the  misstatement  is  in 
reahty  his  act,  within  the  scope  of  his  authority,  and  without 
fault  on  the  part  of  the  insured.^  Neglecting,  however,  to  read 
the  application  without  sufficient  excuse  is  fault  on  the  part 
of  the  insured.^ 

§  187.  Errors  in  Age. — Any  error  made  in  understat- 
ing the  age  of  the  insured  will  he  adjusted  hy  paying  such 
amount  as  the  jpremiurns  paid  would imrehase  at  the  table  rate. 

This  provision  is  liberal  to  the  insured,  and  more  reasonable 
than  a  stipulation  providing  for  absolute  forfeiture  in  case  of 
an  error  in  stating-  the  ao^e. 

This  clause  illustrates  the  disposition  on  the  part  of  insur- 
ance companies  to  make  an  equitable  arrangement  with  the 
insured,  so  far  as  they  can  do  so  without  exposing  themselves 
to  unscrupulous  and  fraudulent  claims. 

§  188.  Assignments. — Ifo  assignment  of  this  pelicy 
shall  take  effect  until  written  notice  thereof  shall  he  given  to  the 
company. 

This  provision,  be  it  observed,  does  not  prohibit  an  assign- 
ment of  the  policy.  It  is  desirable  that  the  insured  should 
have  the  opportunity  of  making  free  use  of  this  form  of  prop- 
erty, for  it  may  often  be  convenient  to  secure  money,  by  loan 
or  otherwise,  upon  it.  Unlike  the  case  of  a  fire  policy,  as  we 
have  seen,  a  life  policy  was  considered  assignable  at  common 
law.  And,  by  the  better  opinion,  if  the  policy  is  valid  when 
taken  out,  it  may  be  assigned  or  made  payable  to  one  who 
has  no  insurable  interest ;  though  in  the  Federal  Supreme 
Court  a  different  rule  has  been  suggested. 

A  pledge  or  deposit  of  the  policy  is  not  of  itself  an  assign- 
ment.*   Where,  with  the  consent  of  the  insurers,  an  assignment 

'  Critchett   v.    American    Ins.    Co.,  '  N.  Y.  Life  Ins.  Co.  v.    Fletcher, 

53  Iowa,  404  ;  s.  c,  36  Am.  Rep.  230.  117  U.  S.  519.     Ryan  v.   World  Life 

Boehenv.  WilliamsburghCitylns.  Co.,  Ins.  Co.,  41  Conn.  168;  s.  c,  19  Am, 

35  N.  Y.  131  ;  s.  c,  90  Am.  Dec.  787.  Rep.  490. 

«  Ins.   Co.    V.    Wilkinson,  18  Wall.  ♦  Griffey  v.  N.  Y.  Central  Ins.  Co., 

222.     Miller  v.  Phenix  Mut.  Life  Ins.  100  N.  Y.  417  ;    s.  c,  53  Am.   Rep. 

Co.,  107  N.  Y.  292.  203. 


212  Insurance  :    Fire,   Life,  Marine.  §  189 

has  been  consummated,  this  amounts  to  a  new  contract  be- 
tween the  company  and  the  assignee.^ 

As  to  the  past,  however,  the  assignee  simply  steps  into  the 
position  of  the  assignor,  and  can  only  recover  under  the  policy 
in  case  the  assignor  has  not  been  guilty  of  any  breach. 

No  one  except  the  company  can,  in  any  event,  make  objec- 
tion to  the  assignment  from  the  original  insured  to  the  assignee, 
unless  the  policy  is  payable  to  other  beneficiaries,  who  have  a 
vested  interest  therein.^ 

After  the  death  of  the  insured,  the  interest  in  the  policy  is 
a  chose  in  action  which  can  be  assigned  without  consent  of  the 
insurers,  and  without  regard  to  the  provisions  of  the  policy.' 

y  §  189.  Incontestable. — This  policy^  after  two  yea/ra, 
will  he  incontestable,  except  for  fraud  or  non-payment  of  pre- 
mium. 

Insurers  have  been  somewhat  stimulated,  no  doubt,  by  the 
statutory  requirements,  which  will  be  found  in  the  appendix, 
to  insert  this  liberal  provision. 

'  Fogg  V.  Middlesex  Mut.  Fire  Ins.  '  Mellen  v.  Hamilton  Fire  Ins.  Co., 

Co.,  10  Cush.  837.  17  N.  Y.    609.     Hall    v.    Dorchester 

•  Leinkauf  v.    Caiman,  110  N.  Y.  Mut.  Fire  Ins.  Co.,  Ill  Mass.  53  ;  s.  o., 

60.  15  Am   Rep.  1. 


CHAPTEK   XYIIL 


THE    ACCIDENT    POLICY. 


Accident   insurance  is  a  branch  of  life   insurance,  and   is 
governed  by  the  same  principles.     The  latter  protects  against 
loss  by  death,  whether  caused  by  old  age,  disease,  or  accident.    -.^ 
The   former  is  limited   to  loss  caused    by  accident,   whether       o^ 
occasioned  by  a  bodily  disability  or  fortuitous  death.  \p 

§  190.  Accident. — An  accidental  injury  is  one  that  hap- 
pens to  the  insured  without  the  concurrence  of  his  will  or 
intent,  but  it  may  be  the  result  of  his  intentional  act  provided  ^ 
only  such  result  was  not  foreseen ;  thus  in  case  of  an  injury  to  the  ^/'^ 
insured  caused  by  intentionally  jumping  from  the  platform  of  a 
train  of  cars  under  such  excusable  circumstances  that  no  harm 
could  have  reasonably  been  expected  to  follow.^  So  of  an  injury 
to  the  insured  caused  by  a  blow  from  the  handle  of  a  pitchfork 
slipping  through  his  hands  while  he  was  loading  hay,  which 
produced  peritoneal  inflammation  and  ultimately  death,  the 
beneficiary  was  allowed  to  recover  on  the  ground  that  the  loss 
was  by  accident.^  So  of  a  sprain  caused  by  lifting  heavy 
weights.*     So  of  an  unintentional  draught  of  poison.* 

Unless  expressly  excluded  by  the  terras  of  the  policy,  an 
accident  covers  an  injury  intentionally  inflicted  upon  the  in- 
sured by  another ;  as,  for  example,  in  an  affray.^  But  where 
the  terms  of  the  policy  expressly  exclude  an  injury  of  that 
character,  the  restriction  of  the  contract  will  prevail.' 

•  U.  S.  Mutual  Accident  Asso.  v.  App,  509  (1890).  But  see  Bavliss  v. 
Barry,  131  U.  S.  100.  But  see  Southard  Travellers  Ins.  Co  ,  6  Ins.  L.  J.  109. 
V.  Railway  Pass.  Assur.  Co.,  34  Conn.  Preferred  Mut.  Ace.  Asso.  v.  Beidel- 
574.  man,  1  Monaghan  (Pa.),  481. 

'  North  Am.  Ins.  Co.  v.  Burroughs,  '  Order  of    Chosen  Friends  v.  Gar- 

69  Pa.  St.  43.  rigus,  104  Ind.  133. 

'  Martin  v.  Travellers  Ins.  Co.,  1  F.  '  DeGraw  v.  National  Ace.  Society, 

&  F.  505.  51  Hun,  142.     Travellers  Ins.  Co.  T. 

*  Mut.  Ace.  Asso.  V.  Tuggle,  39  111.  McConkey,  127  U.  S.  661. 


214  Insukanob  :    Fike,  Life,  Marine.  §  191 

Sunstroke,  when  not  expressly  excluded  from  the  opera- 
tion of  the  policy,  is  generally  considered  to  be  a  disease  rather 
than  an  accidentJ*^ 

In  regard  to  negligence  of  the  insured,  where  the  policy  is 
silent,  the  rule  is  the  same  as  in  other  branches  of  insurance  ;  but, 
as  we  shall  soon  see,  the  usual  conditions  of  the  policy  modify 
the  insurer's  liability  in  this  respect.^  Accidental  injury  is  a 
phrase  of  such  broad  scope  that,  as  might  be  expected,  the 
insurers  have  limited  its  application  by  many  restrictive  provis- 
ions, differing  some^fhat  in  the  forms  of  policies  adopted  by  the 
different  companies. 

§  191.  Amount  of  Recovery  and  for  What  Acci- 
dents.— The  sum  of dollars  per  week  against  loss  of 

time  not  exceeding  twenty-six  consecutive  weeks,  resulting  from 
hodily  injuries  effected  through  external  violent  and  accidental 
means  which  shall,  independently  of  all  other  causes,  immedi- 
ately and  wholly  disable  hirn  from,  transacting  any  and  every 
kind  of  business  pertaining  to  his  occupation  above  stated,  or  if 
loss  by  severance  of  one  entire  hand  or  foot,  etc.,  or  if  death 
results  from  such  injuries  alone  within  ninety  days. 

Death  by  accidental  drowning  is  by  external,  violent,  and 
accidental  means.^  Death  during  a  plunge  bath,  in  the  house, 
was  held  not  to  be  within  the  policy.^  But  where  a  boat  was 
overturned  by  the  waves  and  the  insured  was  drowned,  the 
death  was  covered  by  the  policy.^ 

Where  an  accident  produced  a  weakened  condition  of  the 
system,  from  which  cold  and  pneumonia  resulted,  it  was  held 
that  the  whole  chain  of  events  was  caused  by  the  accident  as  a 
proximate  cause;®  and  within  the  same  princi'ile  of  law  was 
classed  an  accident  which  caused  physical  injuries  which,  in 
turn,  resulted  in  apoplexy  and  death ;  '^  but  where  disease  is 

$o^    •  Sinclair  v.    Maritime   Passengers'  *  Tennant  v.  Travellers'  Ins.  Co.,  31 

'^'^  AssnTCoTTsi  Ellis  &  El.  478.     Dozier  Fed.  Rep.  322. 

V.  Fidelity  &  Casualty   Co.,  46   Fed.  'Tucker    v.    Mutual    Benefit    Life 

Rep.  446.  Co.,    5U   Hun,  50  ;    s.  c,   121    N.   Y. 

'  Schneider  v.  Providential  Life  Ins.  718. 

Co.,  24  Wis.  28  ;  s.  c. ,  1  Am.  Rep.  157.  •  Isitt  v.  Railway  Passengers'  Assur. 

*  Trew  V.  R'y  Pass.  Assur.  Co.,  6  H.  Co.,  L.  R.  22  Q.  B.  Div.  504. 

&  N.  839.     Mallory  v.  Travelers'   Ins.  '  National  Benefit  Assn.     v.   Gxau* 

Co.,  47  N.  Y.  62 ;  8.c.,  7  Am.  Rep.  410.  man,  107  Ind.  288. 


§  192  Accident  Policy.  215 

specially  excepted  from  the  chain  of  causation,  the  rule  is 
otherwise.^  So,  also,  where  intentional  injuries,  inflicted  by  the 
insured  or  any  other  person,  are  expressly  excepted  from  the 
operation  of  the  policy,  the  wider  liability  of  the  insurers  must 
be  limited  by  the  terms  of  the  contract."^ 

The  provision  that  the  injury  insured  against  must  be 
effected  by  the  specified  means,  ''  independently  of  all  other 
causes,"  is  so  unreasonable,  indefinite,  and  repugnant  to  the 
main  purpose  of  the  contract,  that  the  courts  construe  it  very 
strictly  against  the  insurers,  and  sometimes  really  seem  to  dis- 
regard it  altogether.  Thus,  though  the  policy  excepted  death 
arising  from  fits,  acting  directly  or  jointly  with  accidental 
injury,  the  insurance  was  held  to  cover  a  case  where  the  in 
sured  was  seized  with  a  fit  and  fell  under  the  wheels  of  an 
engine  which  caused  his  death.^  And  in  another  case,  although 
the  polic}'^  expressly  excepted  "  injuries  from  taking  poison  in 
any  manner,"  the  Illinois  court  allowed  a  recovery  for  death 
from  an  overdose  of  laudanum  taken  by  mistake.^ 

The  insured  was  shot  in  the  back,  causing  a  paralysis  which 
involved  the  loss  of  the  use  of  his  feet.  It  was  held  to  be  a 
loss  of  "two  entire  feet."^  The  meaning  of  total  disability  is 
considered  in  Young  v.  Travelers'  Ins.  Co.,®  and  depends  very 
much  upon  the  wording  of  the  particular  policy.  By  a  strict 
construction  of  the  policy  against  the  insurers,  the  same  court 
allowed  a  recovery  where  the  immediate  cause  of  death  was 
fright.^ 

§  192.  Exception  of  Hazardous  Employment. — 

Whether   one   occupation    is   more   hazardous    than    another 

'  Smith  V.  Accident  Ins.  Co.,  23  L.  *  Sheanon   v.    Pacific  Mutual    Life 

T.  N.  S.  861.  Ins.  Co.,  77  Wis.  618  (1890)  ;  s.  c,  30 

^  De  Graw  v.  National  Accident  So-  Am.  St.  Rep.  151. 

ciety,  51  Hun,  143.     Phelan  v.  Trav-  •  80  Me.  244.    See  also  Lyon  v.  Rail- 

elers'Ins.  Co.,  38  Mo.  App.  640.  way  Pass.    Assur.   Co.,  46   Iowa,  631. 

'  Lawrence  v.  Accidental  Ins.   Co.,  Hooper  v.  Accidental  Death  Ins.  Co., 

7  Q.   B.   D.  216.     Fitton  v.  Acciden-  5  H.  <fe  N.  545  ;  s.  c,  6  H.  &  N.  839. 

tal  Death    Ins.    Co.,   17  C.  B.   N.   S.  Rhodes  v.  Railway  Pass.  Assur.  Co.,  5 

122.  Lans.  71. 

*  Tuggle  V.  Mut.  Ace.  Asso.,  39  111.  '  McGlinchey  v.  Fidelity  &  Casualty 

App.  509  (1890).     Contra,  Hill  v.  Ins.  Co.,  80  Me.  251 ;  s.  c,  6  Am.  St  R«p 

Co.,  22  Hun,  187.  190. 


216  Insurance:    Fire,  Life,  Marine.  §  193 

would  be  a  question  for  the  jur}^  unless  the  policy  contained  its 
own  classification.*  An  employment  or  occupation  does  not 
refer  to  some  unusual  and  incidental  act,  which  a  person  may 
chance  to  be  engaged  in  temporarily,  but  to  his  regular  and 
usual  occupation  or  calling  in  life.^ 

§  193.  Injuries  excluded  of  Which  there  is  no 
Visible  Mark  on  the  Body,  the  Body  Itself  in  Case  of 
Death  not  being  Deemed  such  Mark. — The  courts  are 
not  inclined  to  pay  very  much  respect  to  the  provisions  of  the 
policy  which  purport  to  control  the  laws  of  evidence,  and  the 
question  of  proof  of  accidental  injury  in  case  of  any  disputed 
material  fact  must  go  to  the  jury.  They  will  decide  the  fact 
upon  the  evidence  before  them,  without  much  regard  to  any 
rule  of  evidence  that  may  be  specified  in  the  contract.^  Under 
the  requirement  that  the  evidence  of  injury  must  be  direct  and 
positive,  the  character  of  the  injury  itself  may  furnish  sufficient 
evidence  where  there  is  no  presumption  that  the  injury  was 
intentionally  inflicted.* 

§  194.  Poison,  etc. —  Yoluntary  or  involuntary  taking 

of  "poison  or  contact  with  jpoisonous  substances  or  inhaling  of 

any  gas  or  vapor. 

\A.U      This  exception  covers  the  accidental  taking  of  poison.' 

*!         '      The  courts  have  construed  this  clause  very  strictly  against 

the  insurers,  and  in  a  recent  case  it  was  even  held  that  '"  breath- 

H     ing  gas  "  involuntarily  was  not  the  "  inhaling  of  gas,"  though 

jt         the  distinction  seems  to  be  a  very  fine  one^    In  another  case  it 

was  held  that  the  word  "  poison  "  did  not  apply  to  death  from 

'  Eggenberger  v.  Guarantee  Mutual  Am.    Hep.    410.      Paul   v.    Travelers' 

Accident  Assoc,  41    Fed.    Rep.    172.  Ins.  Co.,  113  N.  Y.  472;  s.  c.,8  Am. 

Tucker  v.  Mutual  Benefit  Life  Co.,  50  St.  Eep.  758. 

Hun,  50.     Knapp  v.  Preferred  Mutual  *  Travellers'  Ins.  Co.  v.  McConkey, 

Accident  Assoc.  53  Hun,  84.  127  TJ.   S.    661.     Utter  v.    Travelers' 

2  Stone  V.  U.  S.  Casualty  Co.,  34  N.  Ins  Co.,  65  Mich.  545  ;  s.  c,  8  Am.  St. 

J.  L.  371.  Rep.  913. 

'  Peck  V.  Equitable  Accident  Asso.,  "Cole  v.  Accident  Ins.   Co.,  61  L. 

52  Hun,  255.     Cited  with  approval,  in  T.  N.  S.    227  (1889).      Contra,    Mut. 

O'Brien  v.  Home  Ben.  Society,  117  N.  Ace  Assoc,  v.  Tuggle,  39  111.  App.  509 

Y.  319.     Reynolds  v.  Equitable  Ace.  (1890). 

Assoc,  59  Hun,  15      Mallory  v.  Trav-  "  Paul  v.  Travelerjs'  Ins.  Co..  112 N. 

elers'  Ins.   Co.,  47  N.  Y.  52  ;  s.  c,  7  Y.  472  ;  s.  c,  8  Am.  St.  Rep.  758. 


§  196  Accident  Policy.  217 

a  malignant  pustule  resulting  from  the  touch  of  an  abraded 
part  of  the  lips  with  a  putrid  animal  substance,  but  that  the 
word  was  confined  to  the  internal  reception  of  a  poisonous  sub- 
stance. It  was,  however,  held,  that  the  pustule  in  question 
amounted  to  a  disease,  and  so  brought  the  case  within  another 
exception  in  favor  of  the  company.^ 

§  195.  Exception  of  Injuries  Resulting  from 
Violating  Law. — The  meaning  of  this  clause  was  considered 
under  the  subject  of  the  life  policy.  The  exemption  was  con- 
strued in  a  recent  case  where  it  was  held  that  an  accident  from 
slipping  upon  frozen  ground  while  returning  from  hunting  on 
Sunday,  in  violation  of  law,  was  not  covered  by  the  policy,  and 
the  insurer  was  discharged.^ 

§  196.  Exception  of  Injuries  Happening  from 
Voluntary  Exposure  to  Unnecessary  Danger. — This 
provision  modifies  the  rule  which  would  otherwise  prevail,  that 
the  negligence  of  the  person  insured  constitutes  no  defense  to 
the  insurers. 

This  exception  as  specified  in  the  policy  is  applicable  to  a 
death  where  the  insured  is  struck  by  a  railroad  train  while 
walking  on  the  track.^ 

But  another  court  was  of  the  opinion  that  it  was  not  appli- 
cable to  a  death  where  the  insured  stepped  from  the  train 
through  a  hole  in  the  floor  of  a  bridge,  where  the  train  tem- 
porarily stopped,  the  existence  of  which  hole  he  had  no  reason 
to  suspect.^ 

Where  the  exemption  was  worded  to  except  injuries  from 
"  exposure  to  obvious  risk,"  the  English  court  gave  the  following 
rule  :  "  Two  classes  of  accidents  are  excluded  from  the  risks 
insured  against ;  viz.,  (1)  accidents  which  arise  from  an  exposure 
by  the  insured  to  risk  of  injury,  which  risk  is  obvious  to  him  at 

'  Bacon   v.   IT.    S.    Mut.     Accident  Mass.    175  ;    s.   c,   45  Am.  Rep.  316. 

Assn  ,  123  N.  Y.   304;  s.  c.  20  Am.  Cornish  v.  Accident  Co.,  L.  R.,  23  Q. 

St.  Rep.  748.  '  B.  D.  453.     133  N.  Y.  366. 

'  Duran  v.  Standard  Life  and  Acci-        *  Burlihard  v.  Travellers'  Ins.  Co., 

dent  Ins.  Co.,  20  Ins.  L.  J.  1035  (Vt.  102  Pa.  State,  -262  ;  s.  c,  48  Am.  Rep. 

Apl.  14,  1891).  2u5.     Scheiderer  v.  Travelers'  Ins.  Co., 

'  TutUe  V.  Travellers'  Ins.  Co.,  134  58  Wis.  13  ;  s.  c,  46  Am.  Bep.  618. 


218  Insurance  :   Fire,  Life,  Marine.  §  197 

the  time  he  exposes  himself  to  it ;  (2)  accidents  which  arise 
from  an  exposure  by  the  insured  to  risk  of  injury,  which  risk 
would  be  obvious  to  him  at  the  time,  if  he  were  paying  reason- 
able  attention  to  what  he  was  doing."  ^ 

This  question  will  oftentimes  be  one  of  fact  for  the  jury.'' 

§  197.  Entering  or  Trying  to  Enter  or  Leave  a 
Moving  Conveyance  Using  Steam  as  a  Motive 
Power,  etc. — This  provision  is  similar  in  principle  to  the  last, 
and  aims  to  limit  liability  to  those  cases  where  the  assured  has 
been  fairly  prudent.^ 

§  198.  Requirement  that  the  Insured  shall  Use 
all  Due  Diligence  for  Personal  Safety  and  Protec- 
'  tion. — The  burden  will  be  upon  the  insurer  to  show  that  due 
diligence  was  not  exercised.'*  If  the  insured  is  killed  by  falling 
from  the  second  story  of  a  barn  which  he  is  having  built,  in 
consequence  of  the  breaking  of  a  joist,  this  does  not  conclusively 
show  a  breach  of  the  stipulation  ;  but  the  question  of  due  dili- 
gence is  properly  left  to  the  jury.^ 

i 

§  199.  Insurance  against  Injuries  received 
while  Traveling. — Some  policies  are  confined  to  an  insur- 
ance against  loss  while  traveling  by  public  or  private  convey- 
ances. Under  this  restriction  the  assured  was  allowed  to 
recover  for  an  injury  received  by  a  fall  on  a  sidewalk  while 
walking  from  a  steamboat  landing  to  a  railway  station,  this 
walk  being  usual  for  travelers  on  that  route,  although  he 
might  have  ridden  in  a  hack;®  but,  generally  speaking, 
walking  could  not  be  held  to  be  a  "  traveling  by  public  or 
private  conveyance." ' 

•  Cornish  v.  Accident  Ins.   Co.,  L.  *  Freeman  v.  Travelers'  Ins.  Co.,  144 

R.  23  Q.  B.  D.  4o3  (1889).  Mass.  572. 

«  Shaffer  v.   Travelers'  Ins.  Co..  31  '  Stone  v.  U.  S.  Casualty  Co.,  34  N. 

111.  App.  112.     Mair  v.  Railway  Pas-  J.  Law,  371. 

s«ngers'  Assur.  Co.,  37  L.  T.  N.  S.  356.  *  Northrup    v.    Railway    Passenger 

»  Miller  v.  Travelers'  Ins.    Co.,    39  Assur.  Co.,  43  N.  Y.  516  ;  s.  c,  a  Am. 
Minn.  548.     Hull  v.  Equitable  Acci-  Rep.  734.     Theobold  v.  Railway  Pas- 
dent  Assn.,  41  Minn.   231.      Bon   v.  sengers'  Assur.  Co.,  10  Ex.  45. 
Railway   Passengers   Assur.    Co.,    56  '  Ripley  v.  Ins.  Co.,  16  Wall.  386. 
Iowa,  664  ;  s,  c.  41  Am.  Rep.  127. 


\ 

CHAPTER  XIX. 

THE    MARINE    POLICY.* 

The  purpose  of  marine  insurance,  as  was  pointed  out  in 
Chapter  I.,  is  to  enable  the  merchant  or  ship-owner  to  carry  on 
his  ventures  undisturbed  by  that  element  of  uncertainty  which 
is  brought  in  by  the  dangers  of  navigation.  Another  element 
of  uncertainty,  that  arising  from  the  fluctuation  of  the  market, 
the  merchant  or  ship-owner  retains  for  himself. 

The  combination  of  these  two  uncertainties  is  affected  by  a 
third ;  namely,  the  ordinary  variation  in  the  length  of  a  voyage, 
which  may  arise  either  from  accident  or  without  accident, 
inasmuch  as  one  vessel  may  be  a  quicker  sailer  than  another,  or 
may  meet  with  better  winds  or  fewer  calms,  or  may  be  more 
skillfully  or  more  fortunately  navigated.  A  delay  arising  from 
such  causes  may  occasion  loss  or  gain  as  the  market  chances  to 
go  up  or  down.  If  there  be  a  gain,  this  must  not  belong  to 
the  underwriter.  The  underwriter,  therefore,  cannot  be  asked 
to  pay  for  the  loss.  The  chances  of  a  longer  or  a  shorter  voy- 
age, as  affecting  the  market,  must  remain  with  the  assured. 

Again,  it  is  of  the  essence  of  insurance  that  it  shall  be  on 
both  sides  a  fair  speculation.  The  underwriter  must  have  a 
chance  of  gaining  to  counterbalance  his  risk  of  loss.  It  follows 
that  the  losses  he  has  to  pay  for  must  be  such  as  may^  not  such 
as  TTiust^  happen.^  This  excludes  ordinary  wear  and  tear  for 
damage  necessarily  suffered  in  driving  the  ship  through  the 
water  by  sail  or  steam,  and  this  notwithstanding  the  degree  of 
such  damage  may  vary  with  the  variations  of  the  weather,  and 
the  winds,  and  other  incidents  common  to  all  voyages ;  it 
likewise  excludes  loss  arising  from  natural  wastage,  corruption 

'  In  the  following  discussion  of  the     Marine  Insurance  by  MacArthur  and 
clauses  of  the    policy  I  have  drawn    Lowndes. 
heavily  upon  the  practical  treatises  on        *  Paterson  v.  Harris,  1  B.  &  S.  358. 


220  Insurance  :   Fike,  Life,  Marine.  §  200 

through  lapse  of  time,  heating  from  the  confined  atmosphere 
of  the  hold,  and  other  causes  inevitable  under  the  given  condi- 
tions. These  are  matters  which  a  merchant  can  with  more  or 
less  accuracy  estimate  beforehand,  and  they  must  be  taken  into 
account  in  determining  the  market  price  of  his  ventures  ;  or,  at 
all  events,  the  underAvriter  does  not  make  himself  responsible 
for  them.  For  the  same  reason,  an  underwriter  must  in  no 
case  be  liable  for  losses  caused  by  the  bad  faith  or  misconduct 
of  the  assured  himself,  since  such  a  liability  would  destroy  the 
fairness  of  the  speculation. 

The  marine  policy,  a  specimen  of  which  is  given  in  the 
appendix,  is  found  upon  examination  to  contain  three  distinct 
stipulations.  The  firet  and  principal  is  the  promise  on  the  part 
of  the  insurers  that  they  will  take  upon  themselves  certain 
specified  perils  or  causes  of  loss  which  may  come  to  the  hurt 
or  detriment  of  the  thing  insured,  which  is  specified,  for  a  voy- 
age or  for  a  term  which  is  likewise  specified.  A  second  stipu- 
lation is  what  is  called  the  "sue  and  labor"  clause,  which  is  an 
encouragement  to  the  assured  to  use  exertion  in  the  saving 
of  his  property  when  in  peril,  by  a  promise  to  contribute  to 
the  expenses  he  may  thereby  incur ;  and,  thjrd,  the  modern 
addition  known  as  the  memorandum  clause,  which  sets  a  limit 
to  these  two  promises  by  exempting  the  insurer  except  in  events 
therein  named  from  claims  below  a  certain  percentage  or 
from  claims  for  damage  to  certain  kinds  of  goods  which  are 
regarded  as  exceptionally  hazardous. 

The  promise  of  the  insurers  is  given  to  a  person  named  or 
described  ;  it  is  given  whether  the  thing  insured  is  at  the  time 
lost  or  not  lost;  it  has  relation  to  a  subject  matter  or  thing 
which  must  be  specified ;  this  thing  at  risk  is  the  ship,  or 
in  the  ship,  and  under  the  command  of  a  master;  it  is  for 
a  voyage  or  term  marked  out,  together  with  the  precise 
point  of  place  or  time  at  which  the  voyage  or  term  com- 
mences and  terminates;  the  amount  of  liability  may  be  left 
open,  or  it  may  be  fixed  by  an  agreed  valuation  ;  and,  lastly,  the 
promise  is  a  guarantee  against  loss  from  certain  specified  perils 
subject  to  certain  conditions  or  warranties. 

§  200.  Name  of  the  Assured. — All  persons  except 
alien  enemies,  that  is,  subjects  of  a  foreign  state  at  war  with 


§  202  Lost  or  not  Lost.  221 

the  home  country,  have  the  right  to  protect  their  property  by 
insurance.  The  name  of  the  insured  should  be  inserted  after 
the  words  "  on  account  of." 

The  reason  for  the  exception  of  ahen  enemies  is  that  it  is 
considered  impohtic  on  public  grounds  to  permit  subjects  to 
make  good  the  losses  sustained  by  an  enemy's  commerce.  It 
is  therefore  an  understood  condition  of  insurances  upon  foreign  i 
property  that  they  do  not  cover  any  loss  which  may  happen  I 
while  hostilities  are  being  carried  on  between  the  respective 
countries  of  the  assured  and  the  underwriter.^ 

§  301.  Lost  or  not  Lost. — The  effect  of  this  stipulation 
is  that  the  insurer  takes  upon  himself  not  only  the  risk  of 
future  loss  but  also  loss,  if  any,  that  may  have  already  hap- 
pened. The  necessity  for  such  a  retrospective  application  in 
policies  is  evident;  for,  owing  to  the  time  occupied  in  the  trans- 
mission of  advices  from  abroad  or  other  unavoidable  causes. 
property  is  often  exposed  to  marine  risks  before  the  parties 
interested  are  cognizant  of  the  fact  or  have  had  an  opportunity 
to  protect  themselves  by  insurance. 

If  the  assured  is  aware  of  the  loss  at  the  time  when  the 
insurance  is  effected  he  cannot  recover  from  the  underwriter 
who  undertook  the  risk  in  ignorance  of  the  fact  ;  nor  is  it 
permissible  for  an  underwriter  to  retain  the  premium  if  at  the 
time  of  such  insurance  he  is  privately  informed  of  the  ship's 
arrival.^  But  if  at  the  time  when  the  insurance  is  efifected  the 
vessel  has  arrived  in  safety,  the  underwriters  will  be  entitled 
to  the  premium,  provided  they  and  the  assured  were  alike 
ignorant  of  the  fact.'' 

Where  a  policy  of  insurance  has  been  effected  by  one  partjn 
on  behalf  of  another  without  authority,  it  may  be  ratified  after! 
loss  by  the  party  on  whose  behalf  it  is  made  though  the  latter 
be  informed  of  the  loss  at  the  time  of  such  ratification.*  / 

§  303.  At  and  From. — These  words  precede  the  blank 
for  the  description  of  the  voyage.     There  is  a  material  differ- 

'  Ex    parte    Lee,    13    Vas.    Jr.   64.  Bradford  v.  Symondson.  4  Asp.  Mar. 

Sands  v.  N.  Y.  Life  Ins.  Co.,  50  N.  Y.  L.  C.  455. 
636  ;  s.  c,  10  Am.  Rep.  535.  *  Williams  v.  North  China  Ins.  Co., 

«  Carter  v.  Boehm,  3  Burr,  1909.  L.  R.  1  C.  P.  D.  757. 

»  People  V.  Dimick,  107  N.  Y.  18. 


222  Insurance  :   Fire,  Life,  Marine.  §  203 

ence  between  insurance  "  from,"  and  one  "  at  and  from,"  any- 
place. The  first  form  of  description  attaches  to  the  vessel  on 
sailing,  but  the  second  covers,  also,  the  risk  in  port.^ 

When  a  vessel  is  insured  "  at  and  from "  a  home  port 
where  she  is  then  lying,  the  risk  commences  as  soon  as  the 
insurance  is  effected,  and  continues  during  the  whole  time  she 
remains  there  in  preparation  for  the  voyage  insured. 

When  a  vessel  is  insured  "  at  and  from  "  a  port  abroad  to 
which  she  is  bound,  the  policy  attaches  on  the  arrival  of  the 
vessel  within  the  limits  of  such  port,  provided  she  is  then  in  a 
state  which  will  admit  of  a  fair  inception  of  the  risk  insured. 

If  the  vessel  arrive  at  the  port  where  risk  is  to  have  its 
inception  in  such  a  crippled  condition  that  she  is  unable  to  lie 
there  in  safety  until  made  fit  for  the  homeward  voyage,  the 
policy  will  not  attach.^ 

But,  on  the  other  hand,  if  the  vessel,  though  damaged,  be 
in  a  condition  consistent  with  her  security  in  port,  the  risk  will 
commence  from  the  first  moment  of  her  arrival  within  the 
port  specified.^ 

It  is  generally  the  case  that  on  a  vessel's  arrival  nt  the  port 
where  the  homeward  insurance  attaches  she  is  under  the  pro- 
tection of  an  outward  policy,  which,  by  its  terms,  continues  in 
force  for  a  period  varying  from  twenty-four  hours  to  thirty 
days  after  her  arrival.  During  this  interval,  therefore,  both 
policies  are  in  force,  and  the  vessel  is  doubly  insured.  To  pre- 
vent the  outward  and  homeward  insurances  thus  overlapping, 
a  stipulation  is  often  inserted  in  the  latter  policies.  When  an 
insurance  is  effected  "  at  and  from  "  an  island,  or  other  district 
comprising  several  places  of  trade,  then  the  risk  commences  on 
the  ship  as  soon  as  the  vessel  has  arrived  in  good  safety  at  any 
port  within  such  district,  and  on  cargo  upon  its  shipment. 

§  203.  The  Voyage. — The  voyage  must  be  described  in 
such  a  manner  that  a  mercantile  man  conversant  with  the 
usages  of  trade  ought  to  be  able  clearly  to  understand  what 
IS  intended,  and  the  voyage  thus  described  must  be  rigidly 
adhered  to,  except  in  the  case  of  unforeseen  necessity. 

'  Nelson  v.  Sun  Mutual  Ins.  Co.,  71        '  Houghton  v.  Empire  Marine  Ins 
N.  Y.  453.  (  o,  L.  R,  I  Ex.  206. 

*  Parmeter  v.  >  ousius  2  (amp.  2.  5, 


§  204  The  Subject  of  Insurance.  223 

From  first  to  last  there  must  be  no  unreasonable  delay  or 
divergence  from  the  usual  mode  of  conducting  the  adventure, 
otherwise  the  policy  will  be  void  from  the  moment  of  commit- 
ting the  deviation,  though  not  antecedently.^  ^ 

There  are  three  ways  of  describing  a  voyage :  Either  every\ 
port  which  the  ship  is  to  visit  may  be  named,  or  general  words 
may  be  used  which  cover  a  certain  range,  and  leave  room  for 
variations  within  it ;  or,  lastly,  where  there  is  a  clear  known 
custom  as  to  the  track,  and  that  custom  is  intended  to  be  fol- 
lowed, it  may  suffice  to  name  the  termini  only,  and  rely  on  the/ 
custom. 

If  the  insurance  is  from  or  to  a  district  comprising  several 
ports,  these  ports  must  be  visited  in  their  natural  or  geograph- 
ical order,  unless  there  is  an  established  custom  of  the  trade  to 
vary  this  order,  in  which  case  the  customary  order  must  be 
observed.'^  But  a  clause  is  often  inserted  in  the  policy  giving 
permission  to  touch  and  stay  at  certain  ports  without  prejudice 
to  the  insurance. 

Whether  liberty  to  call  at  a  port  gives  liberty  to  land  or 
load  cargo  there,  must  depend  on  whether  such  an  intention 
may  naturally  be  inferred  from  the  description  of  the  voyage 
in  the  policy  taken  in  conjunction  with  the  customs  of  the 
particular  trade ;  ^  and  wherever  a  ship  has  liberty  to  call  at  a 
place,  she  may  always  land  or  load  goods  there,  provided  this 
can  be  done  without  additional  delay.* 

Sometimes  a  deviation  clause  is  inserted,  providing  that  the 
property  is  covered  in  the  event  of  a  deviation,  at  a  premium 
to  be  agreed  upon. 

§  304.  The  Subject  of  Insurance. —  Upon  the  hody^ 
tachle,  ajpjparel^  and  other  furniture  of  the  good  ship,  or  upon  all 
kinds  of  lawful  goods  and  merchandise  laden  or  to  he  laden  on 
hoard  the  good  ship,  or  upon  the  freight  of  all  kinds  of  lawful 
goods  and  merchmidises  laden  or  to  he  laden,  etc. 

This  phraseology  covers  the  descriptions  of  ship,  cargo,  and 
freight  in  the  three  classes  of  American  policies,  respectively. 

'  Burgess  v.  Equitable  Marine  Ins.  *  Urquhart  v.    Barnard,   1    Taunt. 

Co.,  126  Mass.  70 ;  s.  c,  30  Am.  Rep.  450. 

654.  *  Raine  v.  Bell,  9  East.  195. 

»  Beatson  v.  Haworth,  6  T.  R.  533. 


224  Insurance  :   Fire,  Life,  Marine.  §  204 

Lloyd's  English  policy  covers  ship  and  cargo  in  one  general 
form,  which  is  lilled  in  to  suit  the  particular  case. 

This  general  description  in  the  printed  form  is  controlled  by 
the  written  description  of  the  particular  interest  which  it  is 
intended  to  insure. 

The  terms  of  the  description  in  the  policy  of  insurance  upon 
ship  are  evidently  not  to  be  confined  to  the  bod}^  or  hull  of  the 
vessel,  but  extend  to  her  materials  and  outfit ;  and  it  has  been 
decided  that  the  provisions  of  the  crew  are  included  under  the 
word  "furniture."  A  policy  on  "ship"  in  the  ordinary  form 
will  cover  hull,  materials,  machinery,  boilers,  coal,  and  engine 
stores  ;  in  the  case  of  a  steamer,  the  provisions  for  the  crew 
and  all  the  appurtenances  necessary,  suitable,  or  usual,  or  that 
may  be  presumed  to  belong  to  a  vessel  of  such  description  for 
the  purposes  of  navigation  on  a  voyage  such  as  that  described. 

The  scope  of  an  insurance  on  the  ship  is  limited  by  the 
usage  of  the  trade  to  such  an  outfit  as  is  necessary  to  make 
the  vessel  seaworthy  for  the  voyage  insured,  to  the  exclusion 
of  that  further  portion  which  may  be  supplied  to  fit  her  for  a 
particular  trade. 

Thus,  in  the  case  of  a  vessel  ens^aofed  in  the  Greenland 
trade,  it  was  held  that  the  fishing  tackle  and  stores,  such  as 
harpoons,  lances,  etc.,  for  catching  whales  and  seals,  as  well  as 
the  casks,  cisterns,  etc.,  for  receiving  the  oil  and  blubber,  were 
not  covered  by  a  general  policy  on  ship,  as  it  was  the  custom 
to  insure  such  articles  in  express  terms.' 

But  permanent  passenger  fittings  are  allowed  as  appertain- 
ing to  the  ship  where  the  vessel  is  regularly  employed  in  the 
passenger  trade;  permanent  cattle  fittings,  where  she  is  in 
the  cattle  trade;  a  permanent  grain  ceiling,  where  slie  is  in  the 
grain  trade,  etc.  Temporary  fittings  or  ballast,  such  as  is 
supplied  for  the  voyage  only,  dunnage,  provisions  for  the  pas- 
sengers, and  provender  for  live  stock  are  excluded.  "  Goods  " 
or  "  merchandise  "  denotes  whatever  is  carried  on  board  ship 
for  purposes  of  traflic. 

Here,  again,  the  usage  of  trade  enters  to  restrict  the  full 

meaning  of  the  term,  by  excluding  therefrom,  in  the  absence  of 

established  custom,  goods  laden  on  deck,  and  also  live  stock 

with  the  provender  for  their  maintenance,  master's  clothes,  and 

1  Hoskins  v.  Pickersgill,  3  Dougl.  232. 


§  205  Master's  Name.  225 

the  ship's  provisions.  Money  or  jewels,  if  carried  to  trade 
with,  are  insurable  under  the  name  of  goods. 

In  insuring  freight  it  matters  little  whether  the  interest  is 
described  as  freight,  freight  per  charter  party,  or  the  like. 
Freight  must  be  either  a  ship  owner's  profit  from  carrying 
goods  of  his  own,  or  the  price  of  working  for  others  under  a 
contract.  The  former  kind  is  recoverable  under  the  ordinary 
policy  on  freight.^  As  to  the  latter,  the  actual  contract  must 
necessarily  in  case  of  loss  be  referred  to,  in  order  to  ascertain 
what  was  insured.  Speaking  generally,  a  policy  on  freight 
must  be  taken  to  cover  all  the  ordinary  stipulations  of  the  con- 
tract of  affreightment,  whether  bill  of  lading  or  charter  party. 
Where  the  interest  consists  of  a  ship  owner's  profit  by  carrying 
his  own  goods,  though  this,  as  has  been  said,  may  with  perfect 
propriety  be  insured  separately  as  freight,  yet  generally  speak- 
ing the  method  most  advantageous  to  the  owner  is  to  insure 
it  in  the  same  policy  as  the  goods,  and  to  value  both  together, 
describing  them  as  goods  including  freight. 

It  is  usual  to  insure  passage  money  under  a  distinct  name, 
since  the  incidents  of  this  risk  are  in  many  respects  different 
from  that  of  the  freight  or  merchandise.'^ 

§  205.  Master's  Name. — Provision  is  made  in  the  policy 
for  the  insertion  of  th(3  master's  name,  partly  as  a  means  of 
distinguishing  the  ship  insured  from  others  of  the  same  name, 
and  partly  because  the  personal  character  and  professional 
reputation  of  the  captain  are  not  infrequently  taken  into  ac- 
count by  the  underwriters  in  their  estimation  of  the  risk.  But 
in  practice  the  blank  left  for  that  purpose  is  often  left  unfilled. 

In  immediate  sequence  to  this  blank  are  the  words,  "  or 
whoever  else  shall  go  for  master  in  the  said  vessel,  etc."  In 
case  the  person  originally  mentioned  to  the  underwriter  as  the 
master  of  the  vessel  is  prevented  from  going  in  her,  and  an- 
other is  substituted  for  him,  the  insurance  is  not  vitiated,  even 
though  the  original  name  may  have  been  inserted  in  the  policy, 
and  may  never  have  been  altered,  provided  the  assured  has 
acted  throughout  in  good  faith.  Again,  if  the  master  resign 
his   command,  or   become    incapacitated    during   the   voyage 

'  Flint  V.  Plemyng,  1  Barn.  &  Ad.       ^  Denoon  v.  Home  &  C.  Assor.  Ca, 
46.  L.  R.,  7  C.  P.  341. 

15 


\ 


226  Insurance:    Firk,  Life,  Marine.  §200 

througli  sickness  and  another  is  appointed  in  his  place,  the 
validity  of  the  insurance  is  not  compromised  by  the  change. 

A  mistake  in  the  ship's  name,  however  innocently  made, 
will  vitiate  the  policy  if  it  materially  mislead  the  underwriter 
as  to  the  cliaracter  of  the  risk,  but  otherwise  not.^ 

Sometimes,  especially  in  insuring  consignments  from 
abroad,  the  ship  is  not  named,  the  goods  being  insured  per 
ship  or  ships.  The  usual  course  tin  such  cases  is  to  "  declare  " 
the  interest  by  an  indorsement  on  the  policy  as  soon  as  the 
ship  they  are  to  come  by  is  known.^ 

Declarations  made  on  the  policy  are  always  subject  to  rec- 
tification in  case  it  shall  subsequently  appear  that  the  advices 
have  come  forward,  and  that  the  declarations  in  fact  have 
therefore  been  made  in  an  order*  different  from  that  of  the 
actual  shipment  of  the  goods.  The  shipments  declare  them- 
selves, so  to  speak,  and  take  rank  under  the  policy  in  the  order 
in  which  they  occur ;  so  that  the  declaration  written  on  the 
policy  is  merely  provisional,  and  must  be  set  right  in  case  of 
need.' 

§  306..  Commencement    of  the   Risk. — Beginning 

the  adventure  upon  the  said  goods  and  tnerchandises  from  and 
immediately  following  the  loading  thereof  etc. 

Goods  are  not  insured  under  the  general  form  of  policy 
until  they  are  loaded  aboard  the  ship.  If,  therefore,  the  mer- 
chant desires  to  cover  the  risk  in  boats  or  lighters  from  the 
shore  to  the  ship,  he  should  insert  the  clause,  "  to  include  all 
risk  of  craft  whilst  loading." 

If  property  in  the  goods  does  not  pass  to  the  insured  until 
a  certain  point  in  the  process  of  shipment,  the  policy  will  not 
attach  until  that  point  is  reached ;  as,  for  example,  where, 
by  the  terms  of  a  contract  for  the  purchase  of  a  cargo  of 
rice,  no  Interest  in  the  rice  passed  to  the  buyers  until  the  ship- 
ment of  the  cargo  was  completed,  it  was  held  that  the  latter 
had  no  insurable  interest  in  the  cargo  while  in  course  of  ship- 
ment.*    If  it  is  to  cover  goods  shipped  at  some  place  other 

'  lonides  v.  Pacific,  F.  &  M.  Ins.  Co.,  '  Stephens  v.  Australasian  Ins.  Co., 

L.  R,  6  Q.  B.  674.  L.  R,  8  C.  P.  18 

'  Snowden    v.     Guion,    101    N.    Y.  *  Anderson  v.  Morice,  3  Asp.  Mar. 

458.  L.  C.  391. 


§  207  Termination  of  Eisk.  227 

than  the  port  of  departure,  that  intention  ought  clearly  to 
appear  by  the  terras  used. 

§  207.  Termination  of  the  Risk. —  Until  the  ship  hath 
moored  anchor  twenty-four  hours  in  good  safety,  until  the 
goods  and  77ierchandises  shall  he  safely  landed. 

Between  the  termini  designated  the  policy  protects  the 
goods  during  the  whole  time,  not  on  ship-board  merely,  but 
while  they  are  in  the  warehouse  at  an  intermediate  port, 
always  supposing  that  they  are  put  there  legitimately,  as  from 
some  enforced  necessity,  or  because  a  landing  and  transship- 
ment falls  within  the  regular  course  of  the  voyage  insured.^ 
The  ship  continues  protected  at  port  before  the  voyage  is  com- 
pleted, during  all  time  properly  taken  in  discharging  cargo, 
effecting  needful  repairs,  or  otherwise  making  ready  for  the 
voyage.^  The  policy  likewise  covers  all  delay  occasioned  by 
accidental  causes  during  these  operations,  such  as  being  frozen 
in  for  the  winter,  or  the  like.^ 

It  is  important  to  understand  clearly  what  is  meant  by  moor- 
ing in  good  safety,  after  which  the  ship  is  no  longer  covered  by 
the  policy.*  In  the  first  place,  these  words  presuppose  the  ar- 
rival of  the  vessel  at  the  terminal  point  of  the  voyage,  which  is, 
in  the  case  of  a  cargo-laden  ship,  the  usual  place  of  discharge ; ' 
and,  secondly,  they  provide  that  she  shall  have  been  securely 
anchored  at  that  spot  for  the  period  described. 

The  term  "  good  safety ''  does  not  mean  absolute  immunity 
from  danger,  for  that  would  be  a  condition  impossible  of  attain- 
ment at  any  stage  of  a  marine  adventure,  but  such  a  measure  of 
securit}^  as  will  suffice  to  enable  the  vessel  to  discharge  her 
cargo  and  accomplish  the  other  ordinary  purposes  of  a  stay  in 
port.  Two  kinds  of  security  are  included  in  the  term  "  good 
safety ; "  namely,  physical  and  political  safety.  Good  physical 
safety  means  not  the  safety  of  the  moorings,  but  of  the  ship ; 
not  absolute  freedom  from  damage,  for  then  the  loss  of  a  rope 
or  sail  or  spar  would  prevent  the  vessel  from  being  considered 
in  safety  :  but,  on  the  other  hand,  she  must  not  be  in  a  sink- 

'  Harrison  v.  Ellis,  7  B.  &  B.  465.  *  Leeds  v.  Mechanics  Ins.  Co.,  8  N. 

«  Phillips  V.  Irving.  7  M.  &  G.  328.  Y.  351 . 

"Brown   v.   St.    Nich.    Ins.  Co.,  61  ^  Samuel  v.   Royal  Exchange  Assur 

N.  Y.  332.  Co.,  8  B.  &  C.  119. 


228  Insdkance  :    Fire,  Life,  Marine.  §  207 

ing  condition,  as  was  the  case  witii  a  vessel  which  arrived  at 
her  port  of  destination  a  complete  wreck,  and  after  being  kept 
ajfloat  for  a  few  days,  lashed  to  a  hulk,  sank  in  the  harbor.' 
Good  political  safety  means  immunity  from  capture  or  arrest; 
thus  a  British  vessel,  which  the  day  after  her  arrival  at  a  French 
port  was  laid  under  an  embargo  then  existing  against  all  Brit- 
ish ships,  was  held  to  have  never  moored  at  anchor  twenty-four 
hours  in  good  safety.^ 

A  cargo-laden  ship  must  be  moored  at  her  usual  place  of 
discharge  before  the  twenty-four  hours  will  commence  to  run, 
and  accordingly  in  the  case  of  a  vessel  which  arrived  at  her 
moorings  in  the  Thames,  but  the  same  day  was  ordered  into 
quarantine,  and  was  subsequently  destroyed  by  fire  before  ob- 
taining her  release,  it  was  held  that  the  policy  was  still  running 
at  the  time  of  loss  because  the  vessel  had  not  been  moored  at 
anchor  twenty-four  hours  in  good  safety.^ 

Though  it  is  necessary  that  a  vessel  should  have  arrived  at 
her  place  of  discharge,  it  is  not  necessary  that  the  discharge 
should  have  actually  commenced ;  for  if  the  vessel  has  arrived 
at  her  moorings  and  remained  there  the  specified  period,  await- 
ing her  turn  to  unload,  tiie  risk  is  off.  Policies  on  outward 
bound  vessels  are  sometimes  so  framed  as  to  continue  in  force 
for  thirty  days  after  arrival  at  port  of  destination.* 

With  regard  to  time  policies,  the  precise  date  of  commence- 
ment and  termination  is  named  in  the  policy.  The  day,  unless 
otherwise  expressed,  begins  and  ends  at  midnight. 

The  risk  on  carmj  continues  until  the  ci:oods  have  been  de- 
posited  upon  the  wharf  or  their  customary  place  of  discharge. 
It  then  ceases,  for  the  underwriter  is  not  liable  for  loss  arising 
from  theft,  fire,  or  any  other  perils  to  which  the  goods  may  be 
subjected  while  lying  on  the  wharf  or  in  dock,  unless  an  express 
clause  to  that  effect  has  been  inserted  in  the  polic}'.  In  order 
that  the  policy  may  continue  to  protect  the  goods  while  in 
course  of  landing,  they  must  be  taken  from  the  ship  to  the 
shore  in  the  mode  which  is  usual  in  the  trade  at  the  port  where 
the  discharge  takes  place.  If  it  is  customary  in  the  trade  to 
convey  goods  from  the  ship  to  the  shore  in  lighters,  launches, 

'  Shawe  v.  Felton,  2  East,  109.  »  Waples  v.  Eames,  2  Str.  1243. 

'  Minett    v.    Anderson,  Peake's    R.         *  Lidgett  v.  Secretan,  L.  R.,  5  C.  P 
211.  190. 


§  207  Termination  of  Risk.  229 

or  other  small  craft,  they  are  protected  by  the  policy  during 
such  transport.^  If,  however,  the  assured  depart  from  the 
usual  course  of  trade  by  taking  charge  of  the  goods  at  an 
earlier  period  than  they  would  have  been  delivered  to  him 
under  ordinary  circumstances,  the  underwriters  will  be  dis- 
charged from  responsibility.^ 

The  policy  only  covers  goods  while  they  are  at  the  risk  of 
the  assured ;  and  consequently,  if  cargo  be  sold  afloat,  without 
an  assignment  of  the  policy,  and  the  buyers  take  delivery  of 
the  cargo  in  lighters  sent  alongside,  the  risk  of  lighterage  from 
ship  to  shore  will  not  be  covered,  as  the  underwriters'  risk 
would,  under  such  circumstances,  cease  on  delivery.^ 

Cargo  should  be  landed  within  a  reasonable  time  after  the 
ship's  arrival ;  otherwise  it  will  cease  to  be  covered  by  thei 
policy.  What  is  a  reasonable  time  in  any  particular  case] 
depends  upon  the  usages  of  the  trade.  * 

When  goods  are  insured  by  vessel  bound  to  several  ports  in 
succession,  the  risk  ends  at  the  final  port  of  discharge  named  in 
the  policy.  But  the  insurance  may  be  prolonged  by  the  addi- 
tion of  the  words  "  the  risk  to  continue  until  arrival  of  the 
goods  at  a  market  at  their  final  port  of  discharge."  ^ 

The  underwriters'  risk  upon  the  bill  of  lading  freight  may 
be  considered  coincident  with  the  risk  on  goods,  since  it  does 
not  commence  until  the  cargo  is  shipped,  and  then  only  applies 
to  such  portion  of  it  as  may  be  actually  on  board,  unless  cargo 
has  been  contracted  for  under  a  valid  agreement,  and  is  lying 
in  readiness  to  be  placed  on  board,  the  ship  also  being  ready  to 
receive  it.  The  termination  of  the  risk  on  cargo  and  freight 
respectively  is  in  general  simultaneous.  For  concurrently  with 
the  landing  of  the  goods  in  safety  the  ship-owner  earns  the 
freight  upon  them,  and  the  risk  of  the  underwriter  on  freight 
is  proportionately  reduced  ;  so  that,  in  the  event  of  the  ship 
being  lost  after  a  part  of  her  cargo  has  been  discharged,  the 
loss  on  the  freight  policy  will  be  limited  to  the  freight  on  the 
cargo  remaining  on  board.  In  the  case  of  cha.rtered  freight, 
however — ^that  is,  money  payable  for  hire  of  a  ship  under  a 

>Matthie  v.    Potts,    3   Bos.    &    P.  Archangel  M.  Ins.  Co.,  L.  R..  10  Q.  B. 

23.  249. 

'  Sparrow  V.  Taruthers,  3  Str.  1236  *  Richardson    v.  London  Assurance 

'  North  of  England  P.  O.  C.  Co.  v.  Co.,  4  Camp.  94. 


230  Insurance  :   Fire,  Life,  Marine.  §  208 

charter  party — the  risk  commences  as  soon  as  there  is  an  incep- 
tion of  performance  under  the  charter  party  {i.  «.,  when  the 
owner  or  hirer  has  incurred  expenses  and  taken  steps  toward 
earning  freight)  irrespective  of  the  question  whether  any  cargo 
has  been  placed  on  board  or  is  in  readiness  to  be  so  placed,  and 
continues  until  the  vessel  has  performed  her  contract.  But  the 
words  "  from  the  loading  thereof  "  in  a  freight  policy  exclude 
the  goods  not  actually  loaded,  and  also  the  freight  for  them.' 

§  208,  Touch  and  Stay.— ^w(?  it  shall  he  lawful  for 
said  vessel  in  her  voyage  to  proceed  aiid  sail  to^  touch  and  stay 
at,  any  po7'ts  or  places  if  thereunto  obliged  hy  stress  of  weather, 
etc.,  without  prejudice  to  this  insurance. 

The  words  "  if  obliged  by  stress  of  weather,  etc.,"  practi- 
cally nullify  the  important  privilege  which  would  otherwise  be 
extended  to  the  insured  by  this  clause.  If  such  a  privilege  is 
given  to  touch  and  stay  at  any  ports  or  at  certain  ports  named, 
it  is  understood  in  the  case  of  a  voyage  policy  that  the  ports 
visited  must  lie  within  the  ordinary  track  of  the  voyage,  and 
that  they  must  be  visited  for  some  purpose  connected  with  the 
object  of  the  adventure.^ 

Where  steamers  or  sailing  vessels  of  a  particular  line  or  in 
a  particular  trade  habitually  follow  a  specific  route  or  call  at 
certain  ports,  the  usage  so  to  do  will  be  tacitly  incorporated  in 
a  policy  in  the  ordinary  form  without  the  addition  of  any 
special  clause. 

*  Jones  V.  Neptune  Marine  Ins.  Co.,     Bragg    v.    Anderson,   4  Taunt.    290, 
L.  R.,  7  Q.  B.  702.  Williams  v.  Shee,  3  Camp.  469. 

•  Lavabre  t.  Wilson,  1   Dougl.  284. 


CHAPTER  XX. 

MABINE    POLICT CONCLUDED. 

§  309.  Perils  of  the  Seas. — These  denote  all  marine 
casualties  resulting  from  the  unusual  or  violent  action  of  the 
elements  as  distinguished  from  their  natural  and  silent  influence 
upon  the  fabric  of  the  vessel.  But  they  do  not,  as  has  been 
already  observed,  include  the  deterioration  of  a  vessel's  hull  and 
materials,  commonly  called  wear  and  tear,  which  is  incidental 
to  her  employment  in  navigation  and  her  exposure  to  the  or- 
dinary action  of  the  elements  ;  nor  do  they  include  injuries 
to  the  machinery  incident  to  its  ordinary  operation. V 

Vessels  cannot  be  navigated  without  encountering  the  action 
of  wind  and  wave,  and  are  often  liable  to  be  on  the  ground  or 
to  come  into  contact  with  piers  without  the  happening  of  any- 
thing abnormal.  At  the  same  time,  it  is  to  be  remembered  that 
any  ordinary  occurrence  Avill  become  extraordinary  if  qualified 
by  unusual  conditions,  but  there  must  be  something  fortuitous 
to  constitute  a  peril  of  the  sea. 

Thus  a  transport  in  government  service  was  ordered  into 
Boulogne,  where  there  is  a  dry  harbor,  and  was  moored  near 
one  of  the  quays.  The  vessel  took  the  ground  on  the  ebb  of 
the  tide,  as  was  inevitable;  but,  owing  to  the  presence  of  a 
considerable  swell  in  the  harbor,  she  struck  the  ground  with 
unusual  violence,  and  subsequently  eighteen  of  her  knees  were 
found  to  be  broken.  The  court  held  that  this  damage  was  the 
result  of  a  peril  of  the  sea.'^ 

Ill  another  case,  the  ship,  which  was  insured  under  a  time 
policy,  proceeded  in  the  course  of  her  trading  to  Sunderland, 
where  she  was  moored  head  and  stern,  and  took  the  ground  in 
the  usual  way  at  the  ebb  of  the  tide.     The  beach  was  hard  and 

^jV^    lThaBxes&  Mersey  Marine  Ins.  Co.        «  Fletcher  v.  Inglis,  2   B.  &  Aid. 
i^*?        v.  Hamilton,  L.  R.,  12  App.  Cas.  484.     315. 


232  Insurance:    Fire,  Life.  Marine.  §210 

steep,  and  the  ship  la\^  with  a  slight  list  toward  it.  She  ap- 
peared to  strain  in  this  position,  especially  when  taking  the 
ground  and  floating,  and  after  remaining  some  time  in  the 
place  it  was  found  that  she  was  hogged.  The  Court  of  Com- 
mon Pleas  held  that  the  damage  received  under  the  above  cir- 
cumstances was  not  caused  by  perils  of  the  seas,  but  fell  within 
the  designation  of  wear  and  tear.  Here  the  vessel  on  her 
arrival  at  Sunderland  went  up  the  river,  and,  in  consequence  of 
the  rising  and  falling  of  the  tide,  rested  upon  the  river's  bed  and 
received  damage.  There  was  nothing  fortuitous,  no  peril,  no 
accident.^  Where  live  cattle  carried  between  decks  were  thrown 
violently  together  and  killed  by  the  tremendous  rolling  of  the 
sea,  though  not  touched  by  the  water,  this  was  held  to  be  a  loss 
"  directly  by  the  sea."  ^ 

Sails  split  by  the  wind  or  blown  away  while  set,  unless  oc- 
casioned by  the  ship's  grounding  or  coming  into  collision,  or  in 
consequence  of  damage  to  the  spars  to  which  the  sails  are  bent, 
are  not,  according  to  the  general  practice,  chargeable  to  under- 
writers, although  the  weather  may  have  been  stormy  at  the 
time  of  the  occurrence. 

This  custom  is  to  be  supported  rather  on  grounds  of  ex- 
pediency than  of  principle.  A  sail  which  is  blown  away  in 
a  hurricane  is  as  truly  lost  by  the  operation  of  sea  perils  as  a 
mast  which  is  carried  overboard  by  the  same  cause.  On  the 
other  hand,  if  the  splitting  or  carrying  away  of  sails  in  use 
were  to  be  allowable  whenever  they  were  subjected  to  an 
extraordinary  strain,  there  would  be  much  practical  diflBculty 
in  the  endeavor  to  discriminate  between  ordinary  and  extraor- 
dinary weather,  especially  in  view  of  the  fact  that  the  resistance 
which  a  sail  is  capable  of  offering  to  the  wind  depends  to  a 
considerable  extent  upon  its  quality  and  condition. 

There  is  a  similar  rule  of  practice  relative  to  rigging,  which 
is,  that  rigging  injured  by  straining  or  chafing  is  not  charged 
to  underwriters,  unless  such  injury  is  caused  by  blows  of  the 
sea,  grounding,  or  contact,  or  by  displacement  through  sea 
perils  of  the  spars,  channels,  bulwarks,  or  rails. 

§  210.   Foundering    at    Sea. — Foundering  at   sea  is 

included  among  the  ])erils  of  the  sou  if  caused  by  the  violence 

'  Magnus  v.  Buttemer.  11  C.  B.  876.         '■'  Snowden  v.  Guion,  101  N.  Y.  458. 


§  212  Grounding — Collision.  233 

of  the  winds  or  waves  or  anv  other  accidental  occurrence,  but 
not  so  if  caused  by  overloading,  defect,  or  inherent  weakness. 

If  a  ship  has  not  been  heard  of  for  so  long  a  time  after  sail- 
ing that  there  remains  no  reasonable  hope  of  her  safety,  she  is 
})resumed  to  have  foundered  at  sea.  There  is  neither  in  this 
country  nor  in  England  any  fixed  rule  as  to  when  that  pre- 
sumption arises.  In  England,  after  an  interval  of  time  sup- 
posed to  be  sufficient  to  cover  the  reasonable  chances  of  arrival, 
the  ship  is  posted  at  Lloyd's  as  missing,  and  then  the  under- 
writers are  expected  to  pay, 

§  311.  Grounding.— Grounding,  whether  arising  from 
stress  of  weather,  ignorance  of  the  locality,  blunder  or  stupidity, 
the  desire  to  avoid  some  approaching  vessel  or  other  danger, 
in  short,  for  any  reason  out  of  the  ordinary  course  of  things  in 
the  voyage,  is  considered  one  of  the  perils  of  the  sea. 

§  312.  Collision. — Collision  is  also  a  peril,  and  this 
whethei*  it  be  the  result  of  inevitable  accident  or  fault  on  the 
part  of  the  ship  insured,  or  of  fault  on  the  part  of  the  other 
ship ;  for,  on  the  principle  of  causa  proxima,  the  underwriter 
must  j)ay,  be  the  fault  whose  it  may.  What  he  pays  for  is  the 
damage  to  the  thing  he  has  insured.  As  for  the  liability  of 
the  owner  of  the  ship  in  fault  to  pc<,y  for  the  damage  suffered 
b}''  the  other,  that  is  a  matter  with  which  his  underwriter  has, 
under  the  body  of  his  policy,  nothing  at  all  to  do.  It  is  usual 
however,  to  provide  for  this  liability  by  a  distinct  contract 
called  the  collision  clause,  a  specimen  of  which  will  be  found  in 
the  appendix.^ 

The  principle  of  the  collision  clause  is  that  the  underwriters 
will  relieve  the  insured  of  three-fourths  of  his  liability  to  pay 
damages  for  loss  of  property  in  and  on  board  the  other  ship. 
He  is  to  take  one-fourth  himself,  as  a  check  upon  carelessness 
in  the  choice  of  servants ;  and  his  responsibility  in  respect  of 
loss  of  life  and  personal  injury,  as  well  as  for  damage  to  the 
cargo  in  his  own  ship,  is  left  untouched. 

There  is  a  difference  to  the  insured  in  the  language  of  dif- 
ferent collision  clauses  in  respect  to  the  matter  of  costs,  a  pro- 

'  London  Steamship,  &c.,  Ins.  Co.  v.  Grampian  S.  Co.,  L.  R.,  24  Q.  B.  D. 
663  (1890). 


234  Insurance  :    Fire,  Life,  Marine.  §  213 

vision  for  which  is  sometimes  omitted  from  the  clause,  in  which 
case  the  underwriters  are  not  responsible  for  their  share  of 
costs.  The  liability  under  the  collision  clause  is  not  particular 
average  ;  consequently  is  not  subject  to  the  limitation  of  five 
per  cent. 

§  213.  Stress  of  Weather. — Under  the  head  of  sea 
perils  is  damage  suffered  through  stress  of  weather;  as  by 
blows  of  the  seas  which  carry  away  bulwarks,  boats,  deck 
houses,  and  the  like  ;  by  losing  masts  and  yards  in  a  gale ; 
springing  of  a  leak  through  violent  straining ;  shifting  of  the 
cargo,  or  becoming  water-logged.  The  only  difficulty  in  such 
cases  consists  in  distinguishing  between  sea  peril  and  wear  and 
tear. 

§  314.  Fire. — Fire  may  arise  from  a  variet}"^  of  causes 
— from  lightning,  the  spontaneous  combustion  of  the  cargo, 
the  negligence  of  the  master  or  crew,  the  acts  of  enemies, 
or  the  precautionary  measures  of  rulers  (as  in  case  of  a 
vessel  burned  by  the  municipal  authorities  for  fear  of  being 
infected). 

The  underwriter  is  liable  for  loss  occasioned  by  fire,  whether 
its  origin  is  inexplicable  or  whether  it  can  be  assigned  to  one 
of  the  above-named  or  some  other  kindred  cause,  with  the  ex- 
ception of  combustion  generated  through  the  inherent  defect 
of  the  subject  insured,  or  in  consequence  of  the  goods  having 
been  shipped  in  a  damaged  state.  But  if  the  combustion  is 
originated  by  sea  damage  sustained  by  the  goods  after  ship- 
ment, it  is  covered  by  the  policy  ;  and  however  the  fire  may 
have  been  occasioned,  if  it  extend  to  other  goods  which  are  un- 
connected with  the  cause  of  the  disaster,  or  to  the  ship  herself, 
the  underwriter  is  responsible.' 

Damage  to  cargo  caused  by  pouring  water  into  the  hold, 
scuttling  the  ship,  or  taking  other  extraordinary  measures  to 
extinguish  a  fire,  is  recoverable  in  general  average  ;  ^  or  it 
may  be  claimed  direct  in  the  first  instance  under  the  policy  if 
the  latter  include  the  risk  of  particular  average. 

If,  however,  a  package  is  on  fire,  and  water  is  poured  upon 

>  Amould,  Mar.  Ins.  760.  *  Whitecross    Wire  &   Iron  Co.   t 

Savill,  L.  R.,  8Q.  B.  D.  653. 


§  215  Perils  of  War.  235 

it  to  extinguish  the  fire,  no  allowance  is  made  in  general  aver- 
age for  any  damage  by  water  to  the  package  so  aJffected,  but 
the  loss  is  particular  average.  The  reason  for  this  exception 
in  practice  appears  to  be,  that  an  article  which  is  ignited  is 
deemed  to  be  virtually  lost,  so  that  the  action  of  pouring  water 
upon  it  involves  no  sacrifice,  but  is  intended  to  reduce  the  loss 
or  effect  a  salvage.^ 

The  risk  of  fire  is  covered  during  the  whole  of  the  transit 
of  goods,  on  shore  as  well  as  on  shipboard,  provided  the  transit 
is  for  one  entire  or  unbroken  voyage,  as  with  insurance  on 
goods  it  almost  always  is. 

It  was  held  in  one  case  that  an  explosion  of  steam  caused 
by  the  bursting  of  a  marine  boiler,  though  not  identical  with 
fire,  is  a  peril  of  a  sufficiently  like  kind  to  be  covered  by  the 
clause  comprehending  "  all  other  perils,  losses,  and  misfor- 
tunes." ^  But  that  case  was  subsequently  criticised  by  the 
House  of  Lords  and  substantially  overruled.^'  v  tu:"-'-, 

§  315.  Perils  of  War. — The  common  feature  in  this  list 
of  perils  is  violence  at  the  hands  of  man.  The  underwriter 
takes  upon  himself  the  burden  of  all  loss  or  damage  thus 
occasioned,  whether  it  consist  of  injury  to  the  vessel's  hull, 
spars,  and  rigging,  b}'  an  enemy's  shot  or  shell,  or  by  other 
hostile  acts,  or  the  total  destruction  of  the  property  insured 
bj'  the  operation  of  the  same  causes.  As,  however,  merchant 
vessels  are  not,  in  general,  able  to  offer  a  successful  resistance 
to  the  attack  of  an  armed  ship,  the  casualty  which  most 
frequently  results  from  hostilities  is  capture. 

Capture,  in  the  proper  signification  of  the  term,  is  the 
forcible  appropriation  of  property  by  an  enemy  or  belligerent 
with  intent  to  keep  it ;  *  and  also  covers  all  losses  directly 
occasioned  by  capture  or  seizure,  whether  legal  or  illegal,  by 
mutinous  passengers  or  slaves,  regularly  commissioned  vessels 
of  war,  privateers,  or  pirates,  with  the  single  exception  of 
capture  of  Americans'  property  by  American  ships  in  time  of 
war. 

'  Amould  Mar.  Ins.,  722.  *  Thames  &  Mersey  Marine  Ins.  Co.,     rA-^ 

»  West  India  &  P.  Tel.  Co.  v.  Home,  v.  Hamilton,  L.  R.,  13  App.  Cas.  484  __'^ 

&c.,  Marine  Ins.  Co.,  4  Asp.  Mar.  L,  C.  (1887). 

841.  *  Cory  v.  Burr,  8  App.  Cas.  405. 


236  Insurance:    Fire,  Life,  Marine.  §  ^15 

The  words  "  men-of-war  "  and  "enemies"  obviously  refer 
to  tiiose  who,  authorized  by  a  prince  or  sovereign  state,  make 
war  in  the  mode  sanctioned  by  tlie  law  of  nations  as  dis- 
tinguished from  "pirates,"  "rovers,"  and  "thieves,"  who  are 
unauthorized  depredators. 

"  Letters  of  mart "  are  commissions  granted  by  the  sovereign 
power  to  those  persons  whose  property  has  been  seized  by  sub- 
jects of  other  states,  authorizing  the  former  to  indemnify  them- 
selves for  the  loss  sustained  by  making  reprisals.  "Letters 
of  countermart "  are  letters  issued  in  favor  of  those  threatened 
by  such  reprisals,  authorizing  them  to  resist  the  privateers 
furnished  with  letters  of  mart. 

Captured  property  is  not  considered  to  have  been  divested 
from  its  orio^inal  owner  until  it  has  undero^one  sentence  of  con- 
demnation  in  a  legally  constituted  court  of  the  enemy.  But 
the  assured  may  abandon  to  the  underwriter,  and  claim  for  a 
total  loss,  on  first  hearing  of  the  capture.  If  the  abandonment 
is  accepted  bv  the  underwriter,  the  matter  is  settled.  If  it  is 
declined,  the  assured  may  take  legal  proceedings,  and  will 
recover,  provided  the  property  is  not  restored  before  action  is 
brought. 

Necessary  expenses  incurred  in  the  redemption  or  recovery 
of  captured  property  are,  in  general,  recoverable  under  the 
policy. 

The  word  "  thieves,"  as  used  in  the  English  policy,  has  been 
held  to  be  applicable  only  to  persons  proceeding  from  outside 
of  the  ship,  not  to  the  crew  or  passengers.  The  robbery  con- 
templated, according  to  that  rule,  is  that  which  is  committed 
with  violence,  and  does  not  extend  to  mere  theft  which  it  is 
considered  might  be  prevented  by  the  exercise  of  ordinary 
vigilance  on  the  part  of  those  in  charge  of  the  vessel.  Conse- 
quently the  master  or  owner  is  alone  responsible  for  this 
species  of  loss,  which  is  not  attributable  to  accident,  but  to  the 
negligence  of  those  who  were  bound  to  take  proper  care  of 
the  property.  The  same  interpretation  has  been  given  by  the 
English  court  to  the  word  "thieves"  in  the  bill  of  lading  as  in 
the  policy  of  insurance.^ 

A  different  rule,  however,  has  been  followed  in  America, 
and  the  word  "thieves"  as  used  in  the  marine  policy  here  is 
'  Taylor  V.  Liverpool  &  G.  W.  Steam  Co.,  3  Asp.  Mar.  L.  C.  277. 


§  216  Arrests,  Restraints,  etc-  237 

not  confined  to  assailing   thieves,   but  extends  to  thefts    by 
mariners,  passengers,  or  others.* 

§  316.  Arrests,  Restraints,  etc. — This  clause  refers 
only  to  acts  of  state,  or  acts  authoi'ized  by  the  sovereign 
authority  in  the  country.  An  unauthorized  seizure  or  detention, 
as  by  a  mob  in  a  meal  riot,  does  not  come  within  the  clause, 
though  the  underwriter  would  be  liable  for  it  as  a  loss  by 
pirates  or  thieves.^  Capture  is  taking  possession  with  intent  to 
change  the  property  ;  arrest  is  taking  with  intent  ultimately  to 
restore  to  the  owner ;  restraint  is  a  prevention  of  the  goods 
from  going. 

The  species  of  arrest  to  which  shipping  has  been  most  fre- 
quently subject  is  an  embargo,  which  is  a  decree  issued  by  the 
government  of  a  state  to  prohibit  the  departure  of  vessels 
lying  within  its  jurisdiction.  An  embargo  laid  upon  any  ves- 
sel entitles  the  assured  to  give  notice  of  abandonment,  and,  if 
the  embargo  continues  to  the  time  action  is  brought,  to  recover 
as  for  a  total  loss ;  unless,  in  the  first  place,  the  arrest  is  only 
temporary,  without  occasioning  any  permanent  loss  of  control 
over  the  ship,  or  unless  the  assured  is  a  foreigner  and  the  em- 
bargo is  imposed  by  his  own  government  in  contemplation  of 
hostilities  with  this  country. 

The  acts  and  restraints  of  princes  and  rulers  mentioned  in 
the  policy  and  bill  of  lading  have  reference  to  a  forcible  inter- 
ference, and  do  not  extend  to  legal  proceedings  conducted  in  a 
constitutional  manner.^  A  blockade  operates  as  a  restraint  of 
princes  with  respect  to  property  detained  within  its  compass  ; 
but,  according  to  an  English  decision,  exclusion  from  a  port  is 
not  restraint,  and,  accordingly,  a  loss  resulting  from  the  aban- 
donment of  the  voyage  owing  to  the  blockade  of  the  port  of 
destination  was  not  recoverable  under  the  policy,  such  a  loss 
being  excluded  by  the  rule  oausia  j)r ox i ma  nonremota  spectatur} 

The  term  "  people  "  is  to  be  understood  not  in  the  sense  of 

'  Am.  Ins.  Co.  v.  Bryan.  1  Hill,  25.  W.  Steamship  Co..   23   L.   T.   N.   S. 

Spinetti  v.   Atlas   Steamship   Co.,   80  251. 

N.  Y.  71.  *  Rodocanoehi  v.    Elliott,  28  L.  T. 

'  Nesbitt   V.    Lushington,   4    T.    R.  N.  S.  845.      See  Richardson  v.  Maine 

783.  F.  &  M.  Ins.  Co.,  6  Mass.    10?  ;   s.   c, 

•  Finlay   v.    The   Liverpool    &    G.  4  Am.  Dec.  91 


238  Insurance  :    Fire,  Life,  Marine.  §  217 

a  mob  or  multitude,  but  as  the  ruling  power,  however  it  may  be 
composed.^ 

Sometimes  vessels  are  seized  and  detained,  ami  avGn  confis- 
cated, by  the  authorities  under  whose  jurisdiction  they  are  lying 
in  consequence  of  some  violation  of  the  law  having  been  com- 
mitted by  the  persons  connected  with  them.  This,  however,  is 
not  an  arrest,  restraint,  or  detainment  of  princes,  though  it  may 
amount  to  barratry  of  the  master  or  mariners. 

r       §  317.  Barratry  of  the  Masters  and  Mariners.^ 

This  term  signifies  any  wilful  misconduct,  either  fraudulent  or 
in  violation  of  the  law,  which  is  committed  by  the  captain  or 
crew  without  the  connivance  of  the  ship-owner,  and  which 
tends  to  the  ship-owner's  prejudice,  either  as  injuring  or  expos- 
ing to  risk  of  injury  his  property  or  the  property  intrusted  to 
his  care,  or  as  exposing  it  to  the  risk  of  forfeiture  or  seizure  for 
penalties  on  account  of  the  breach  of  law. 

Barratry  is  a  crime,  and  therefore  no  mere  error  of  judg- 
ment can  amount  to  it;^  but  a  willfully  improper  stowage  of 
cargo  on  deck,  instead  of  under  deck  as  instructed,  will  consti- 
tute barratry  by  a  master.^  The  act  of  barratry  need  not  be 
intended  for  the  private  benefit  of  the  master  or  mariners,  for 
any  unauthorized  breach  of  law  exposing  the  owner  to  penalties 
is  barratry,  though  it  were  intended  for  the  advantage  of  the 
owner ;  *   but  negligence  is  not  barratry. 

Examples  of  fraudulent  barratry  are  scuttling,  burning,  or 
stranding,  or  selling  or  disposing  of  a  ship,  or  running  away 
with  her,^  embezzling  the  cargo  and  unlawfully  selling  it,  or 
making  away  with  the  proceeds,  or  any  mischief  done  to  ship 
or  cargo  by  mutineers.^  Examples  of  barratry  through  mere 
illegality  are  smuggling,''  illegal  trading,^  breach  of  port  regula- 

'  Simpson  v.  Charleston  F.  &M.  Ins.  Dederer  v.  Delaware  Ins.  Co.,  2  Wash. 

Co.,  Dudley  (S.  C),  289.  C.  C.  61. 

'  Parkhurst  V.  Gloucester  Mut.  Fish-  '  Falkner  v.  Ritchie,  2  M.  &  S.  290. 

ing  Ins.  Co.,   100  Mass.  301  ;  s.  c,  97  Lawton  v.  Sun  Mut.  Ins.  Co.,  2  Cush. 

Am.  Dec.  100.     Patapsco  Ins.    Co.  v.  500. 

Coulter,  3  Peters,  232.  •  Elton  v.  Brogden.  2  Str.  1264. 

"  Atkinson  v.  Great  West.  Ins.  Co.,  '  Havelock  v.  Hancill.  3  T.  R.  277. 

65  N.  Y.  531,  overruling  s.c,  4  Daly,  1.  "  Earle    v.  Rowcroft.    8   East,    126. 

*  Grill  V.  General    Iron  Screw  Col-  See  Carrington  v.  Merchants' Ins.  Co.. 

Uery  Co.,    L.  R.  3  C.    P.   476.      See  8  Pet.  495. 


§  218  Jettison.  239 

tions,  exposing  the  ship  to  seizure  or  penalties,'  and  the  hke. 
But  it  should  be  clearly  understood  that  complicity  of  the 
owner  in  any  of  these  misdemeanors  will  exclude  them  from 
the  categor3^of  barratry  and  discharge  the  underwriter  from  all 
responsibility  for  the  consequences. 

Complicity  may  be  inferred  from  a  want  of  reasonable  vigi- 
lance, as  where  a  captain  had  gone  on  smuggling  for  three  suc- 
cessive voyages  without  interference  on  the  part  of  the  owner.^ 
By  the  owner  must  here  be  understood  that  owner  who  has  the 
immediate  control  over  the  master  and  crew  ;  that  is  to  say,  the 
power  of  dismissing  them.  A  ship-owner  who  is  also  part 
owner  can  commit  barratry  as  against  his  co-owners  and  their 
underwriters,  though,  of  course,  not  against  the  underwriters  of 
his  own  share.^  If  the  policy  contains  a  warranty  against 
capture  and  seizure,  and  the  barratry  is  smuggling,  and  the  loss 
claimed  is  a  penalty  inflicted  as  the  price  of  releasing  a  ship 
after  seizure,  this  is  not  recoverable,  being  a  loss  by  seizure  and 
therefore  barred  by  the  warranty.^ 

The  liability  of  underwriters  for  the  consequences  of  the 
barratrous  acts  of  the  master  and  crew  may  be  limited  by 
express  agreement. 

§  318.  Jettison. — This  is  the  intentional  throwing  over- 
board of  a  part  of  the  cargo,  or  any  article  on  board  of  a  ship, 
or  the  cutting  or  casting  away  of  masts,  spars,  rigging,  sails,  or 
other  furniture,  for  the  purpose  of  lightening  or  relieving  the 
ship  in  case  of  necessity  or  emergency.  For  such  losses,  the 
underwriter  of  the  goods  jettisoned  is  in  the  first  instance 
directly  liable ;  ^  the  loss,  though  by  the  hands  of  ma,n,  being 
necessitated  or  justified  by  the  accidents  of  navigation. 

When  goods  or  effects  are  jettisoned  for  the  common  safety, 
all  who  have  derived  benefit,  that  is  to  say,  the  owners  of  the 
ship  and  the  entire  cargo,  are  bound  to  join  in  replacing  the 
ioss  by  the  contribution  called  general  average.  If  the  under- 
writer of  the  article  thus  sacrificed  has  paid  his  assured  the 

■  Knight  V.  Cambridge,  referred  to  Wilson  v.  General  Mut.  Ins.  Co.,  13 

in  8  East,  136.  Cush.  360  ;  s.  c,  59  Am.  Dec.  188. 

'•^  Pipon  V   f 'ope,  1  Camp.  434.  *  Cory  v.  Burr,  8  Q.  E.  D.  313. 

•Jones   V.    Nicholson,    10    Ex.   28.         'Dickenson  v.  Jardine,  L.  R.,  3  C. 

Contra,   where  part  owner  is  master,  P.  639. 


240  Insurance  :    Fire,  Life,  Marine.  §  219 

loss,  he  is  entitled  to  stand  in  the  place  of  the  assured,  and  to 
receive  his  share  of  the  indemnity  furnished  by  the  general 
contribution.  When  goods  are  jettisoned,  the  freiglit  is,  so  to 
speak,  jettisoned  with  them,  and  is  lil<e\vise  recoverable  in 
general  average.  Loss,  wliich  is  the  necessary  and  immediate 
consequence  of  a  jettison,  is  reimbursed  in  the  same  way  as  the 
jettison  itself.  Such,  for  example,  is  damage  caused  by  the 
entrance  of  water  into  the  ship's  hold  while  a  jettison  is  being 
effected;  or  by  holes  being  cut  in  the  deck  for  the  same 
purpose. 

By  general  mercantile  usage,  the  loss  by  jettison  of  goods 
stowed  on  deck  is  not  allowed  in  general  average.  To  this 
usage  there  is,  however,  the  well-recognized  exception,  that,  in 
case  the  carriage  of  a  deck  load  is  customary  in  the  particular 
trade,  contribution  is  made  for  the  value  of  goods  jettisoned 
from  the  deck  in  the  absence  of  any  agreement  to  the  con- 
trary. 

A  jettison  may  be  induced  by  motives  other  than  the  com- 
mon safety,  as,  for  instance,  where  the  ship,  beiag  in  imminent 
danger  of  capture,  the  master  dropped  a  bag  of  specie  into  the 
sea  lest  it  should  fall  into  the  hands  of  the  enemy,  for  which 
the  underwriter  was  held  liable  under  the  head  of  jettison  ;  ^ 
but  when  goods  are  thrown  overboard  on  account  of  their 
inherent  vice,  the  underwriters  are  not  liable.^ 

§  319.  All  Other  Perils,  Losses,  or  Misfortunes. — 

The  terms  of  this  clause  are  so  comprehensive  as  at  first  sight 
to  convey  the  impression  that  they  embrace  every  kind  of 
mishap,  not  already  enumerated,  to  which  property  at  sea  can 
be  subjected.  Such,  however,  is  not  the  case ;  for  here  the 
rule  of  construction  applies  that  general  terms  following  par- 
ticular ones  apply  only  to  matters  which  are  of  the  same  kind 
with  those  specified.  Accordingly,  the  effect  of  the  general 
undertaking,  expressed  as  above,  is  to  bring  within  the  scope 
of  the  contract  all  casualties  which,  though  not  identical  with, 
are  similar  to,  the  risks  enumerated.  Thus,  the  expression  of 
•'all  other  perils,  losses,  and  misfortunes  "  has  been  held  to 
include  damage  to  a  ship  which  had   been  heeled  over  by  the 

'  Butler  V.  Wildman,   3  B.  &  Aid.        •■■  Taylor  v.  Dunbar,  L.  R.,  4  C.  P 
398.  206. 


§  220  Proximate  Cause.  241 

wind  in  a  graving  clock ;  the  loss  of  dollars  thrown  overboard 
from  a  vessel  on  the  point  of  capture,  in  order  that  they  might 
not  be  taken  possession  of  by  the  enemy  ;  the  wrecking  of  a 
steamer  through  the  bursting  of  the  boiler,  etc.,  if  from  the 
unusual  action  of  the  sea.' 

Damage  directly  done  by  rats,  as,  for  instance,  by  the 
gnawing  of  holes  in  the  ship's  bottom,  whereby  she  was  ren- 
dered unfit  for  sea,  has  been  decided  not  to  be  a  peril  insured 
against.^  If,  however,  a  rat  should  gnaw  through  a  leaden 
pipe,  and  thereby  let  in  water  which  sinks  the  ship,  the  under- 
writer would  no  doubt  be  liable.^  If  a  sword-fish  drives  its 
snout  through  a  plank,  the  underwriter  must  pay  for  the 
damage. 

Damage  done  by  worms  to  the  planking  or  timbers  of 
wooden  ships  can  be  effectually  prevented  only  by  copper  or 
metal  sheathing.  If,  through  accident,  such  as  a  grounding, 
the  sheathing  is  anywhere  rubbed  off  and  worms  get  in 
through  the  unprotected  part,  such  damage  must  be  borne  by 
the  underwriters ;  not  so,  if  a  ship  unprotected  by  metal 
sheathing  is  sent  into  seas  infested  by  worms."*  Loss  or  dam- 
age by  explosion,  whether  of  gunpowder,  acids,  or  chemicals, 
is  recoverable  under  the  policy.  So  is  damage  done  to  one 
kind  of  goods  as  the  effect  of  sea  damage  done  to  another 
kind.' 

§  330.  Proximate  Cause. — Where  there  is  no  question 
of  personal  misconduct  on  the  part  of  the  assured  the  law  has 
regard  only  to  the  proximate  or  immediate  cause  of  the  loss. 
But  in  case  of  fraud  or  personal  misconduct  by  the  assured 
himself,  all  consequences  thereof,  remote  as  well  as  direct,  are 
to  be  excluded  from  the  claim  on  the  policy. 

It  is  a  settled  rule  of  law  that  any  loss  directly  caused  by  a 
peril  insured  against  is  to  be  paid  for  by  the  insurers,  notwith- 
standing that  the  loss  may  have  been  brought  about  by  bad 
navigation,  neglect,  or  fault  of  the  master  or  seamen,  or,  ex- 

'  West  India  &  P.  Tel.  Co.  v.  Home  &  '  Laveroni  v.  Drurj ,  8  Ex.  166. 

C.  Mar  Ins.  Co.,  4  Asp.  Mar.  L.  C.  341.  *  Rohl  v.  Parr,  1  Esp.  444. 

"  Hunter  v.  Potts,  4  Camp.  203.    See  '  Koebel  v.  Saunders,  17  C.  B.  N.  S. 

Garrigues  v.  Coxa,  1  Binn.  593;  s.  c,  71. 
3  Am    Dec.  493. 
16 


242  Insurance  :    Fire,  Life,  Marine.  §  220 

cepting  only  the  misconduct  of  the  assured  himself,  any  other 
cause  not  directly  insured  against.^ 

Thus,  where  a  ship  was  destroyed  by  fire  because  a  careless 
mate  had  lighted  a  fire  in  the  cabin  and  then  left  the  ship 
without  a  watchman  on  board.^  Where  a  ship  fell  over  on  her 
side  in  harbor  and  was  bilged  because  the  rope  provided  to 
secure  her  was  not  strong  enough  to  hold  her.^  Where  the 
sloop  drifted  on  the  rocks  while  the  seamen  in  charge  of  her 
had  all  negligently  fallen  asleep.'  Where  a  ship  is  damaged 
by  collision,  though  the  collision  may  have  occurred  in  calm, 
clear  weather,  through  similar  want  of  lookout,  or  the  mis- 
take of  a  helmsman.'  In  these  and  similar  cases  the  insurers 
have  been  held  liable  on  the  ground  that  the  peril  insured 
against  is  the  proximate  cause. 

The  question  of  proximate  cause  presents  itself  under  dif- 
ferent aspects,  and  a  brief  statement  of  some  of  them  will  make 
the  subject  clearer.  Sometimes  the  starting  point  is  a  casualty 
negligently  caused — for  instance,  a  fire — and  the  inquiry  is 
directed  to  one  of  two  points,  as  the  case  may  be :  (1)  How  far 
shall  the  spread  of  the  fire  be  considered  a  proximate  result 
of  the  negligence,  or  (2)  shall  tlie  loss  by  fire  be  said  to  include 
consequences  like  theft,  or  injury  by  water  used  to  put  out  the 
fire,  or  loss  of  business  and  profits,  which,  though  quite  distinct 
from  combustion,  are  caused  by  it?  Then,  again,  in  another 
class  of  cases  the  starting  point  is  a  given  damage  to  the  sub- 
ject of  an  insurance  where  different  causes  have  conjoined  to 
produce  it,  for  one  of  which  the  insurers  are  liable  and  for  the 
other  of  wliich  they  have  assumed  no  express  responsibility. 
The  vital  question  then  arises,  which  cause  shall  be  considered 
thejefficient  controlling  cause  of  the  loss,  and  upon  the  solution 
of  this  question  turns  the  liability  or  exemption  of  the  insurers, 
as,  for  example,  where  a  ship  is  wrecked  upon  a  rock  by  a  storm, 
but  the  master  was  careless  in  steering  it.' 

'  Orient    Ins.    Co.    v.    Adams,    123  2  B.  &  Aid.  73.     American  Ins.  Co. 

U.  S.  (57  (1887).     Phoenix  Ins.   Co.  v.  v.  Bryan,  26  Wend.  563. 

Erie  &    W.   Tr.  Co..   117  U.S.   312.  •  Bishop  v.  Pentland,  7  B.  &  C.  219. 

The  Titania,  19  Fed.  Rep.  101.     Ma-  «  Walkerv.iMaitland,  r,B.&  Aid.  171. 

thews  V.  Howard  Ins.  Co.,  11  N.  Y.  14.  »  Smith  v.  Scott,  4  Taunt.  126. 

Dudgeon  v.  Pembroke,  L.  R.,  2  App.  '  Dudgeon  v.    Pembroke,    L.   R.,  G 

Cas.  29?.  Q.  B.  D.  581.     Thompson  v.  Hopper, 

2  Busk  V.  Royal  Exchange  Ass.  Co.  6  E.  &  B.  191. 


§  222  Peril  Excepted  and  Sea  Peril.  243 

§  331.  A  Peril  Excepted  and  Sea  Peril When  a 

policy  is  effected  with  express  exemption  from  some  particular 
peril,  as,  for  instance,  with  the  clause,  "  free  from  all  conse- 
quences of  hostilities,"  if  a  loss  arises  from  the  joint  operation 
of  the  peril  insured  and  the  peril  thus  excluded,  we  are  to 
inquire  which  of  the  two  was  the  proximate  cause. 

This  appears  from  the  following  decision :  During  the 
American  civil  war  the  light  on  Cape  Hatteras  was  extinguished 
by  the  Confederate  troops  for  miUtary  reasons.  Owing  to  the 
absence  of  this  light  the  captain  of  a  ship  missed  his  reckoning, 
struck  on  a  reef  of  rocks,  and  the  ship  became  a  wreck.  The 
cargo  consisted  of  6,500  bags  of  coffee,  of  which  1,020  would 
have  been  saved  if  the  salvors  had  not  been  prevented  by  the 
Confederate  troops,  who  themselves  only  succeeded  in  saving 
170  bags,  which  they  kept  for  their  own  use.  This  coffee  was 
insured  "  free  from  all  consequences  of  hostilities."  On  these 
facts  the  English  Court  of  Common  Pleas  held  that  the  under- 
writers were  liable  for  the  loss  of  all  but  1,020  bags.  The  case 
was  to  be  dealt  with,  the  court  said,  as  if  there  were  two 
policies,  one  on  the  war  risk  and  the  other  on  the  sea  risk,  and 
the  question  here  was  which  of  the  two  was  the  proximate 
cause  of  the  loss.  As  to  the  1,020  bags,  it  was  the  Confederate 
forces  which  directly  prevented  the  saving,  and  so  caused  the 
loss  of  that  portion.  But  the  extinguishing  of  the  light  was 
only  the  remote  cause  of  the  loss  of  the  remainder,  the  proxi- 
mate cause  being  the  striking  on  the  reef,  which  could  not  be 
said  to  follow  as  a  natural  or  ordinary,  still  less  as  a  necessary 
consequence  of  the  extinguishing  of  the  light. ^  Where  the 
policy  contained  an  exemption  in  the  form  of  an  ice  clause,  and  /\ 
the  delay  and  consequent  loss  were  occasioned  partly  by  the 
ice  and  partly  by  a  peril  insured  against,  a  recovery  was  allowed 
on  the  ground  that  the  peril  was  the  proximate  cause.*/ 

§  333.  Proximate   Cause  as   Limiting  Insurers* 

Liability. — The  rule  looking  only  to  the  proximate  cause  of 
loss  sometimes  operates  in  favor  of  the  insured,  but  sometimes 
in  favor  of  the  insurers.  From  this  principle  it  follows  that  a 
number  of  accidental  or  secondary  losses  springing  out  of  the 

•  lonides  v.   Universal  Marine  Ins.        '^rown^v.  St.  Nicholas  Ins.  Co.,  81 
<\>.,  14  C.  B.  N.  S.  259.  KJ".  332,  by  D wight,  C._-  ^-^-^  n 


244  Insurance:    Fikk,   Life,  Marine.  §223 

damage  to  the  thing  insured,  and   fuUing  on  the  owner  of  it, 
cannot  be  recovered  from  the  insurer. 

For  example,  when  a  ship  is  damaged  by  sea  peril  the 
insurer  is  liable  for  the  cost  of  repairing  but  not  for  the  ship- 
owner's loss  because  the  ship  is  laid  up  and  unable  to  earn 
freight  while  being  repaired.  Nor,  again,  supposing  that  during 
that  period  it  is  necessary  to  retain  the  ship's  crew,  or  any 
portion  of  them,  is  he  liable  for  the  owner's  loss  in  having  to 
pay  and  feed  them  while  the  ship  is  so  unemployed.^  These 
losses  result  not  from  the  damage  but  from  the  delay  incidental 
to  the  damage,  so  that  the  damage  suffered  by  the  ship,  it  may 
be  argued,  is  only  the  remote  cause  of  them.  So  if  fruit,  meat, 
or  any  other  article  of  like  perishable  nature  putrefies  by  reason 
of  delay  springing  out  of  sea  peril,  the  insurer  is  not  liable.' 
Nor,  except  under  the  special  provision  of  the  collision  clause, 
is  the  insurer  of  a  ship  liable  in  case  the  assured  is  obliged  to 
pay  damages  to  the  owner  of  some  other  ship  on  account  of  a 
collision  occasioned  by  the  fault  of  his  crew. 

§  233.  Wear  and  Tear. — Wear  and  tear  is  distin- 
guished from  sea  peril  in  not  being  occasioned  by  unusual 
violence  or  any  accident,  but  by  tlie  mere  "  silent,  natural, 
gradual  action  of  the  elements  upon  the  vessel  itself."  The 
chief  seat  of  wear  and  tear  is  naturally  that  portion  of  the 
fabric  which  is  directly  used  in  urging  the  vessel  through  the 
water—the  sails,  rigging,  and  lighter  spars  of  a  sailing  vessel, 
and  the  screw-shaft  of  a  steamer.  Wear  and  tear  must  be 
discriminated  from  sea-damage,  not  so  much  by  the  kind  of 
weather  it  occurs  in  as  b}^  the  kind  of  damage  done  ;  what  is 
ordinary  weather  for  one  season  or  voyage  being  storm  for 
another.  Besides  that,  the  language  of  ship-masters  varies 
greatly  in  intensity  of  epithet  as  descriptive  of  weather. 

To  distinguish  what  is  wear  and  tear  in  particular  cases 
must,  to  a  great  extent,  be  left  to  the  trained  judgment  of 
experts  in  such  matters.  Some  general  rules  for  their  guid- 
ance, however,  are  adopted  in  the  practice  of  adjusters,  which 
may  be  brought  under  the  following  heads  :  Sails  split  or 
blown  away  while  set  are  ordinarily  treated  as  wear  and  tear ; 

1  DeVaux  v.  Salvador,  4  Ad.  &  Ell.        '  Taylor  v.  Dunbar,  L.  R.,  4  C.  P. 

480.  sue. 


§  223  Wear  and  Tear.  246 

but  not  so,  if  set  when  the  ship  is  aground,  or  if  lost  in  con- 
nection  with  spars  carried  away,  or  if  blown  adrift  when  furled, 
or  in  the  act  of  furling  or  setting  them ;  and  a  further  excep- 
tion ought  probably  to  be  made  in  the  case  of  sails  split  when 
the  ship  is  h'ing  to,  or  scudding  before  the  wind,  or  when  she 
broaches  to.  The  ground  of  this  rule  is,  that  the  mere  press- 
ure of  the  wind  upon  the  sails  while  the  ship  is  under  canvas 
subjects  them  to  an  ordinary  continuous  strain,  the  effects  of 
which  are  every  now  and  then  shown  by  their  splitting  or 
giving  way. 

Where  rigging  is  chafed,  or  stays  or  running  gear  parted, 
from  no  assignable  cause  beyond  the  continuous  strain  upon 
them,  it  is  for  the  same  reason  treated  as  wear  and  tear ; 
but  not  so,  if  the  cause  of  the  breakage  or  chafing  is  something 
unusual  and  accidental,  such  as  the  carrying  away  of  a  mast, 
or  the  like.  The  same  rule,  wnth  the  same  exception,  is  appli- 
cable to  light  spars,  as  studding  sail  booms,  royal  and  top- 
gallant yards,  and  the  like.  What,  for  this  purpose,  are  light 
spars,  must  be  left  to  the  judgment  of  experts.  It  seems 
hardly  reasonable  that  the  same  rule  should  serve  for  small 
coasters,  or  yachts,  which  frequently  lose  their  little  spars  by 
carrying  on  sail,  and  ships  of  the  largest  class,  whose  top- 
gallant masts  may  be  bigger  than  the  others'  topmast,  or  even 
mainmast.  Spars  carried  away  when  no  sail  is  set  on  them 
are  always  admissible  as  particular  average. 

The  breaking  of  a  screw  shaft,  through  mere  wear  and  tear, 
is  perhaps  one  of  the  most  ordinary  dangers  of  steam  naviga- 
tion. It  is  supposed  that  by  the  constant  revolution  of  the 
shaft  some  process  of  crystallization  is  set  up,  which  by  degrees 
renders  the  iron  brittle,  so  that  it  may  snap  under  the  mere 
ordinary  strain  in  fine  weather ;  and  this  takes  place  at  periods 
so  varying  in  different  cases  that  it  is  hardly  practicable  to 
guard  against  it.  Such  a  breakage,  where  there  is  no  accident 
or  violence  to  account  for  it,  can,  of  course,  be  treated  only  as 
wear  and  tear.  But  there  is  a  good  deal  of  floating  wreckage 
in  the  sea,  and  cases  do  occur  in  which  the  breakage  of  a 
shaft  is  not  improbably  attributable  to  contact  with  some  such 
thing. 

A  ship's  ground-tackle,  windlass,  and  hawsers  used  for 
mooring,  are  of  necessity  subjected  to  much  constant  ordinary 


246  Insurance  :    Fire,  Life,  Marine.  §  224 

strain,  or  wear  and  tear.  For  this  reason,  the  rule  of  prac- 
tice formerly  was  to  treat  the  breakage  of  a  hawser,  or  parting 
of  a  chain  cable,  or  breaking  down  of  a  windlass,  as  mere  wear 
and  tear,  unless  it  could  in  some  way  be  traced  to  an  accident 
out  of  the  common  course,  such  as  the  falling  of  another  ship 
athwart  the  hawser,  so  as  to  bring  a  double  strain  upon  it, 
or  the  like.  Latterly,  there  has  been  a  tendency  to  relax  this 
strictness,  particularly  with  regard  to  chain  cables  ;  a  duly  tested 
chain,  it  is  argued,  ought  not  to  give  way  except  under  some 
extraordinary  strain,  so  that  its  giving  way  is  itself  a  proof, 
not  that  the  chain  was  faulty  but  that  the  strain  was  exces- 
sive. 

As  for  a  ship's  calking — if,  without  being  struck  by  seas, 
thrown  on  her  beam  ends,  or  meeting  with  bad  weather,  a  ship 
on  a  long  voyage  gradually  becomes  leaky,  this  is  a  suspicious 
symptom  of  wear  and  tear,  as  affecting  the  hull.  If,  in  such  a 
case,  it  shall  appear  that  the  ship  has  not  been  calked  for  a 
long  time,  the  ship-owner  will  probably  have  difficulty  in  estab- 
lishing: a  claim  on  his  insurers.  But  these  are  cases  as  to 
which  it  is  hardly  possible  to  lay  down  a  rule ;  the  principle  is, 
that,  before  an  underwriter  can  be  made  liable  for  the  calking, 
it  must  be  shown  that  the  leakiness  has  been  occasioned  by 
more  than  ordinarily  bad  weather :  and  ordinarily  bad  weather 
is  a  relative  term,  varying  with  the  season  and  kind  of  voy- 
age ;  and  the  application  of  this  principle  to  individual  cases 
can  only  be  made  with  the  aid  of  experts. 

234.  Original  Defect. — Underwriters  are  not  liable 
for  any  loss  which  is  the  immediate  result  of  an  original  defect 
in  any  part  of  the  hull  or  materials. 

For  instance,  where  a  chain  parts  owing  to  a  defective  link, 
the  consequent  loss  of  the  anchor  and  chain  is  not  recoverable. 
Again,  there  may  be  an  original  flaw  in  the  welding  of  a  stern- 
post,  shaft,  or  otherpart  of  the  hull  or  machinery,  which,  though 
at  first  so  slight  as  to  be  imperceptible,  gradually  reveals  itself 
and  becomes  enhanced  by  the  working  of  the  vessel  at  sea, 
until  it  culminates  in  a  breakdown  of  the  part  affected.  In 
such  a  case  the  cost  of  making  good  the  injury  will  not  form 
the  subject  of  a  claim  under  the  policy.* 

)  Thames  &  Mersey  Marine  Ins.  Co.  v.  Hamilton,  L.  B.,  12  App.  Cas.  484i 


§  225  Sea  Damage  and  Dktkuioration.  24:7 

§  235.  Sea  Damage  and  Ordinary  Deteriora- 
tion, Combined. — When  the  repair  of  sea  damage  is  com- 
bined with  that  of  ordinary  deterioration,  it  is  often  a  work  of 
considerable  nicety  for  the  adjuster  to  resolve  the  complica- 
tions which  ensue,  and  refer  each  description  of  damage  to  its 
proper  head. 

Preparator}'  to  the  consideration  of  a  few  of  the  cases  of 
mixed  damage  ^Yhich  most  frequently  occur,  it  will  be  advis- 
able to  inquire  how  far  such  matters  can  be  dealt  with  upon 
general  principles.  (1)  In  the  first  place  it  is  to  be  remem- 
bered, that,  where  deterioration  of  any  kind  exists  to  such  an 
extent  as  to  make  a  vessel  unseaworthy  on  sailing,  the  risk 
under  a  voyage  policy  will  not  attach.  (2)  Where  the  war- 
ranty of  seaworthiness  is  not  implied,  or  has  been  satisfied,  the 
underwriters  are  liable  for  all  loss  or  damage  proximately 
caused  by  the  perils  insured  against ;  and  there  is  no  other  con- 
dition of  the  ordinary  policy,  whether  express  or  implied,  which 
exonerates  underwriters  from  loss  or  damage  by  the  perils  in- 
sured against  on  the  ground  that  the  peril  only  became  opera- 
tive through  the  weakness  of  the  thing  exposed  to  it.  (3)  De- 
terioration by  wear  and  tear  is  provided  for  by  the  deductions 
for  improvement ;  but  when  an  article  is  worn  out,  those  de- 
ductions are  inapplicable,  as  the  article  is  practically  lost  by 
the  ordinary  deterioration.  (4)  The  liability  of  the  under- 
writer for  the  repair  or  renewal  of  an}'-  part  of  a  ship's  hull  or 
materials,  lost  or  damaged  by  the  perils  insured  against,  is 
unaffected  by  the  presence  of  ordinary  deterioration,  excepting 
w^here  that  deterioration  is  so  extensive  that  it  would  have 
involved  the  condemnation  of  the  subject  of  it,  irrespective  of 
the  further  injury,  in  which  case  there  is  no  liability  on  the 
part  of  the  underwriter,  as  the  ship-owner  has  sustained  no  loss 
by  the  perils  insured  against. 

In  applying  these  principles,  we  may  first  take  a  case  where 
the  combined  damage  was  so  great  as  to  amount  to  a  construc- 
tive total  loss  of  the  ship.  A  ship  insured  with  the  clause 
"  allowed  to  be  seaworthy  for  the  voyage  "  encountered  a  vio- 
lent storm,  in  consequence  of  which  she  was  much  damaged  and 
had  to  put  into  a  port  of  refuge.  On  examination  it  was  found 
that  many  of  the  beams  were  broken,  and  many  of  the  bolts 
and  fastenings  loosened  ;  and  that  the  vessel  being  old,  and  in 


248  Insurance:    Fire,   Life,  Marine.  §  22(* 

many  parts  decayed,  the  decayed  parts  could  not  be  again 
made  use  of,  as  they  would  not  bear  rebolting,  but  would  re- 
quire to  be  replaced  with  new  timbers.  There  was,  however, 
no  reason  to  doubt  that  the  decayed  parts  were  strong  enough 
to  have  enabled  the  ship  safely  to  perform  the  voyage,  had  it 
not  been  for  the  heavy  weather  encountered.  It  was  estimated 
that  the  aggregate  cost  of  the  necessary  repairs  would  exceed 
the  value  of  the  vessel  when  repaired.  On  an  action  upon  the 
policy  to  recover  for  a  constructive  total  loss,  the  learned  judge 
who  tried  the  case  left  it  to  the  jury  to  say  whether  the  cost 
of  the  repairs  of  the  damage  arising  from  the  perils  insured 
against  would  have  exceeded  the  value  of  the  vessel  when  re- 
paired, directing  them,  if  they  were  of  that  opinion,  to  find 
for  the  plaintiffs.  The  jury  returned  a  verdict  for  the  plain- 
tiffs. A  new  trial  was  then  moved  for,  on  the  ground  that  the 
jury  should  have  been  directed,  in  considering  the  repairs 
that  were  necessary,  to  exclude  from  the  estimate  all  such  re- 
pairs as  the  decayed  state  of  some  parts  of  the  ship  made  nec- 
essary ;  but  the  court  held  that  there  had  been  no  misdirection, 
adding  that,  having  carefully  examined  the  evidence,  they  saw 
no  ground  to  suppose  that  any  repairs  had  been  included  in 
the  estimate  which  were  not  fairly  referable  to  the  perils  of  the 
sea.*  In  this  case,  it  is  to  be  observed  that  the  deterioration 
which  the  vessel  had  suffered  by  wear  and  tear  was,  in  effect, 
cast  upon  the  underwriter,  as  the  necessity  to  make  it  good 
arose  from  the  operation  of  the  perils  insured  against. 

§  326.  Application  of  these  Principles  to  Par- 
ticular Average. — We  have  next  to  consider  the  application 
of  the  foregoing  principles  to  the  adjustment  of  particular 
average.  For  the  sake  of  illustration,  let  it  be  supposed  that 
a  mast  has  been  sprung  by  a  peril  of  the  sea,  and  has  likewise 
an  inherent  defect.  If  that  defect  existed  on  the  sailing  of  the 
vessel  to  such  an  extent  as  to  render  her  unseaworth}^  the 
risk,  under  a  voyage  policy,  would  not  attach.  On  the  assump- 
tion that  the  warranty  of  seaworthiness  had  been  complied 
with,  or  was  not  implied,  the  underwriters  would  be  liable  for 
the  loss  sustained  by  the  assured  through  the  springing  of  the 
mast  by  sea  perils,  though  the  inherent  defect  may  have  con 
'  Phillips  V.  Nairne,  4  C.  B.  343. 


§  226  Particular  Average.  249 

tributed  to  that  result.  If,  however,  tlie  weather  were  only 
ordinary,  and  the  mast,  which  could  liave  resisted  the  strain 
exerted  upon  it  in  the  absence  of  the  defect,  were  sprung  in 
consequence  of  the  defect,  the  underwriters  would  be  free  from 
liability. 

The  extent  of  the  loss  sustained  by  the  assured  through  the 
springing  of  the  mast  by  sea  perils  has  next  to  be  ascertained. 
If  the  inherent  defect  were  so  y-i-eat  as  to  involve  the  condem- 
nation  of  the  mast,  irrespective  of  the  injury  by  sea  perils,  the 
assured,  having  sustained  no  loss  by  the  latter,  would  have  no 
claim  under  the  policy.  If,  however,  but  for  the  injury  by  sea 
perils,  the  mast  would  still  have  been  serviceable,  the  under- 
writers would  be  liable  for  the  cost  of  repairing  that  injury. 
Should  the  injury  involve  the  renewal  of  the  mast,  either  on 
account  of  the  spring  alone,  or  because  the  latter,  though  it 
could  have  been  repaired  by  fishing  the  mast,  had  the  latter 
been  sound,  cannot  be  so  repaired  on  account  of  the  defect, 
the  underwriters  will  be  liable  for  the  cost  of  the  renewal, 
less  the  ordinary  deduction  for  improvement.  If,  however, 
the  spring  occur  in  one  part  of  the  mast,  and  the  defect  in 
another,  so  that  the  spring  might  have  been  repaired  by  fish- 
ing the  mast,  but  in  consideration  of  that  injury,  coupled 
with  the  defect,  it  is  decided  to  have  a  new  mast,  the  liability 
of  the  underwriters  will  be  confined  to  the  estimated  cost  of 
fishing  the  old  mast,  less  the  usual  deduction  for  improve- . 
ment,  that  being  the  extent  of  the  loss  by  sea  perils.         ,/ 

A  similar  case  occurs  where,  in  the  course  of  repairing 
injuries  caused  by  sea  perils  to  a  ship's  bulwarks  and  stan- 
chions, or  upper  deck  beams,  it  is  necessary  to  remove  several 
deck-planks ;  and  the  latter,  owing  to  the  wood  being  old  and 
frail,  cannot  be  removed  without  spoiling  them,  though  if 
there  had  been  no  such  defect  they  could  have  been  replaced. 
In  that  contingency,  if  the  deck-planks,  though  defective, 
would  still  have  been  serviceable  had  it  not  been  for  the  dis- 
turbing effect  of  the  sea  perils,  the  underwriters  are  liable  for 
the  cost  of  replacing  them,  less  the  ordinary  deduction  for 
improvement ;  though  they  would  not  be  liable  if  the  planks 
were  so  defective  as  to  necessitate  their  renewal,  irrespective  of 
the  accident. 

When  injury  to  iron-work  by  the  perils  insured  against  is 


/ 


250  Insurance  :    Fire,  Life,  Marine.  §  227 

combined  with  the  effects  of  corrosion,  the  liabiHty  of  under- 
writers for  the  combination  should  be  tested  according  to  the 
same  method  as  has  been  apphed  to  the  case  of  similar  injuries 
to  wood-work  combined  with  the  effects  of  decay. 

In  case  of  the  fracture  of  a  steamer's  shaft,  or  the  breaking 
down  of  her  machinery,  in  consequence  of  inherent  defect 
alone,  there  is  no  Habihty  on  the  part  of  underwriters  for  the 
consequent  damage ;  but,  if  the  damage  be  aggravated  owing 
to  the  action  of  sea  perils  upon  the  injured  parts,  the  under- 
writers will  be  liable  for  the  enhancement.  For  instance, 
should  a  propeller  get  loose  upon  the  shaft,  owing  to  a  defect 
in  the  key,  the  cost  of  making  good  that  defect  would  not  be 
recoverable ;  but  should  heavy  weather  ensue,  and  the  violence 
of  the  sea  acting  upon  the  displaced  propeller  cause  injury  to 
it  or  to  the  shaft,  the  damage  so  caused  would  be  claimable  as 
particular  average.  In  the  event  of  a  shaft  being  fractured,  or 
a  steam-engine  breaking  down,  on  account  of  sea  perils  com- 
bined with  inherent  defect,  the  extent  of  the  loss  arising  from 
the  former  cause  must  be  ascertained  upon  the  same  principles 
as  have  been  stated  in  relation  to  other  repairs. 

§  337.  Limitation    of   the    Liability    of   Under- 

"writers. — The  principal  losses  which  are  not  covered  by  the 
terras  of  the  policy,  and  for  which  the  underwriters  are  not 
liable,  are  arranged,  as  below,  in  a  summary  form  under  the 
four  heads  specified. 

1.  Loss  by  deterioration  and  ordinary  outlay  in  navigation, 
such  as  the  splitting  or  carrying  away  of  sails  by  the  wind ; 
the  breaking  and  straining  of  the  rigging  while  navigating ;  the 
parting  of  hawsers  and  ground-tackle,  unless  subjected  to  an 
extra  strain  owing  to  some  accidental  occurrence ;  the  rolling 
away  of  small  spars,  such  as  studding-sail  booms  or  top-gallant 
and  royal  yards,  with  the  exception  last  mentioned  ;  injur}'^  to 
pumps ;  the  breakage  of  a  steamer's  shaft,  unless  attri  butable 
to  heavy  weather,  or  some  other  peril  insured  against ;  damage 
to  the  hull  of  a  vessel  through  taking  the  ground  in  the  ordi- 
nary course  of  navigation ;  slackness  of  seams,  resulting  from 
wear  and  tear;  the  wastage  of  metal  sheathing  consequent 
upon  use  and  exposure ;  damage  by  rats  or  worms ;  decay  of 
wood-work ;  corrosion  of  iron-work ;  and,  in  general,  the  ordi- 


§  227  Limitation  of  Liability.  251 

nary  deterioration  of  a  vessel's  hull  and  materials;  ordinary 
leakage  and  breakage  of  cargo;  and  all  oi'dinary  charges 
incurred  during  the  prosecution  of  the  adventure,  including 
wages  and  victualing  of  the  crew,  though  enhanced  in  amount 
owing  to  the  prolongation  of  the  voyage  through  sea  perils. 

2.  Loss  by  the  inherent  defect  of  the  subject  insured,  as 
where  fish  or  meat  becomes  putrid,  rice  or  flour  heated,  fruit 
rotten,  wine  sour,  or  hides  tainted,  not  by  contact  with  sea 
water,  but  by  natural  decomposition,  even  though  the  latter  arise 
from  the  prolongation  of  the  voyage  by  sea  perils  ;  *  disease  and 
natural  death  of  animals ;  original  defects  in  the  hulls  or  mate- 
rials of  vessels  ;  flaws  in  the  machinery  of  steamers,  etc. 

3.  Loss  remotely  caused  by  the  perils  insured  against. 
This  limitation  includes  loss  of  interest  on  capital  embarked  at 
sea,  or  loss  of  market  on  cargo,  owing  to  the  protraction  of 
the  voyage  by  bad  weather ;  loss  arising  from  the  compulsory 
abandonment  of  the  voyage  consequent  upon  blockade,  hostile 
occupation,  or  other  deterrent  cause ;  the  liability  of  ship- 
owners for  loss  or  injury  caused  to  persons  or  property  through 
the  default  of  their  servants  ;  the  liability  of  ship-owners  for 
the  charges  incurred  in  the  removal  of  wreck,  even  though  the 
underwriters  have  paid  a  total  loss  and  claimed  the  salvage ; 
loss  by  the  forced  sale  of  goods  at  a  port  of  refuge  to  provide 
funds  for  the  repair  of  the  ship,  or  to  defray  other  expenses 
necessary  for  the  prosecution  of  the  voyage  ;  ^  the  liability  of 
the  cargo-owner  to  make  up  the  deficit  in  the  payment  of  a 
bottomry  bond,  on  ship  and  cargo,  arising  from  the  ship  and 
freight  being  of  insufficient  value  ;  ^  loss  by  the  forced  sale  of 
property  under  admiralty  decree  to  realize  the  amount  of  a 
claim  thereon ;  *  loss  by  a  prejudice,  or  suspicion  of  damage  ; ' 
the  forfeiture  of  freight,  arising  from  the  exercise  of  a  power  of 
mulct  or  canceling  option  by  the  charterer,  etc.* 

4.  Loss  directly  attributable  to  the  misconduct  of  the  as- 
sured or  his  agent.'    The  following  are  instances  of  this  limita- 

'  Taylor  v,  Dunbar,  L.  R.,  4  C.  P.  '  Cator  v.  The  Great  Western  Ins. 

206.  Co.,  2  Asp.  Mar.  L.  C.  90. 

»  Powell  V.  Gudgeon.  5  M.  &  S.  431.  '  Inman  SS.   Co.  v.  Bischoff,  5  Asp. 

•  Greer  v.  Poole,  4  Asp.  Mar.  L.  C.  Mar.  L.  C.  6.     Mercantile  SS.   Co.  v. 
800.  Tyser,  5  Asp.  Mar.  L.  C.  6,  note. 

♦  Thompson  v.  Reynolds,  7  El.  &  B.  '  Thomp.-on  v.   Hopper,  6  E.  &  B. 
172.  172,  937. 


252  Insurance  :   Fire,  Life,  Marine.  §  228 

tion:  Loss  by  unseaworthiness ;  loss  in  the  shipping  or  landing 
of  cargo,  directly  attributable  to  the  negligence  of  the  ship- 
owner's servants,  or  to  defect  in  the  ship's  tackle;  damage  by 
bad  stowage,  rats  or  other  vermin  ;  loss  by  American  capture 
or  hostile  arrest  for  illegality ;  loss  resulting  from  the  act  of  a 
foreign  state,  of  which  the  assured  is  a  subject,  when  com- 
mitted with  a  hostile  intention  against  this  country  (the  assured 
being,  in  such  a  case,  identified  in  the  eye  of  the  law  with  his 
government  in  the  proceeding) ;  the  loss  of  articles  placed  in 
improper  or  insecure  situations,  such  as  water-casks  on  deck, 
and  hawsers  or  other  ropes  lying  on  deck,  unless  the  vessel  is 
just  entering  or  leaving  port.  Under  the  same  head  may  be 
placed  the  custom  by  which  an  underwriter  is  exonerated  from 
liability  for  the  loss  of  cargo  laden  on  deck,  unless  its  carriage 
there  is  sanctioned  by  special  agreement  in  the  policy,  or  by 
established  custom  of  the  trade. 

§  338.  The  Sue  and  Labor  Clause. — This  clause  is 
to  be  treated  as  an  engagement  distinct  from  the  main  body  of 
the  policy,^  and  therefore  not  subject  to  the  restrictions  con- 
tained in  the  memorandum.  The  liability  under  it  is  not  a 
liability  for  particular  average.^  It  is  distinct  from  the  rest  of 
the  policy  in  this  further  sense,  that,  although  the  underwriter's 
liability  for  a  loss  of  the  thing  insured  resulting  from  a  single 
casualty  is  restricted  to  the  amount  of  his  subscription,  he  may 
be  liable  beyond  that  amount  for  such  a  loss  when  coupled  with 
a  claim  under  the  sue  and  labor  clause,  as  when  expense  is  in- 
curred in  an  unsuccessful  attempt  to  save  a  ship  which  never- 
theless is  totally  lost.' 

Two  conditions  are  requisite  to  constitute  a  claim  under  the 
sue  and  labor  clause  :  the  apprehended  mischief  must  be  some- 
thing for  which  the  underwriters  would  have  been  liable,  and 
the  measure  for  safety  which  gives  rise  to  the  expense  claimed 
must  be  the  act  of  the  assured  himself  or  of  his  agent  or  ser- 
vant. If,  for  example,  goods  are  insured  '"  free  of  capture,"  it 
is  clear  that  an  expense  incurred  to  prevent  a  capture  could  not 

'  Lohre  v.  Aitchison,   2  Q.  B.    D.  *  Alexandre  v.  Sun  Mutual  Ins.  Co., 

609.  51  N.  Y.   2oii.     Lohre  v.  Aitchison,  3 

'  Kidstonv.  Empire  Marine  Ins.  Co.,  Q.  B.  D.  558.      Providence  &  S.    SS. 

L.  B  ,  1  C.  P.  535.  Co.  V.  Phoenix  Ins.  Co..  89  N.  Y.  563. 


§  230  Other  Assuranok.  258 

be  claimed  under  this  clause  ;  nor,  if  "  against  total  loss  only," 
an  expense  incurred  merely  to  diminish  damage  or  avert  a  loss 
other  than  total.' 

Where  salvors  pick  up  a  ship  derelict  at  sea,  or  as  volunteers, 
and  bring  the  property  to  port  in  safety,  without  being  in  any 
sense  hired  by  an  agent  of  the  assured,  the  payment  for  salvage 
is  not  a  claim  under  the  sue  and  labor  clause.  The  cost  of  re- 
pairing a  damaged  ship  is  not  a  claim  under  the  sue  and  labor 
clause,  while  the  cost  of  earning  freight  by  a  justifiable  trans- 
shipment is ;  because  in  the  latter  case  there  is  a  worse  evil 
averted,  while  in  the  former  case  there  is  not. 

§  229.    Exemption   under    Five    Per    Cent,— J^o 

partial  loss  or  particular  average  shall  in  any  case  he  paid 
unless  amounting  to  Jive  per  cent. 

The  purpose  of  this  restriction  is  to  relieve  the  insurers  from 
such  small  injuries  as  may  very  probably  be  caused  by  the 
natural  deterioration  of  perishable  articles,  and  to  exempt  them 
from  trifling  losses  often  arising  more  from  wear  and  tear  than 
from  perils  insured  against,  and  almost  certain  to  occur  in  any 
event. 

By  the  English  view,  successive  losses  may  be  added  to- 
gether to  make  up  the  required  percentage ;  ^  but  the  Massa- 
chusetts court  was  of  the  contrary  opinion  and  held  otherwise 
in  respect  to  successive  losses  happening  to  the  ship."  For  a 
further  consideration  of  percentage  clauses  see  §  232. 

§  230.  Other  Assurance. — If  the  assured  shall  have 
made  other  assurance  prior  in  date  to  this  policy^  this  company 
shall  he  answerable  only  for  so  mucJi  as  the  amount  of  such  prior 
assurance  may  he  deficient  towards  fully  covering  the  premises 
herehy  assured,  and  this  company  shall  return  the  premium  upon 
so  much  of  the  sum  hy  them  assured  as  they  shall  he  by  such 
prior  assurance  exonerated  from  /  and  in  case  of  any  assu7'ance 
upon  said  premises  subsequent  in  date  to  this  policy,  this  com- 
pa/ny  shall  nevertheless  be  answerable  for  the  full  extent  of  the 

'  Kideton  v.  Empire  Ins.  Co.,  L.  R.,       '  Brooks  v.  Oriental  Ins.  Co.,  7  Pick. 

1  C.  P.  543.  259.      Paddock    v.   Commercial    Ins. 

'  Blackett  v.  Royal  Exchange  Ass.  Co.,  104  Mass.  521. 
Co.,  2  Cr.  &  J.  244. 


254  Insurance  :    Fire,  Life,  Marine.  §  230 

sum  hy  them  suhscribed  without  right  to  claim  contribution  from 
such  subsequent  assurers,  and  shall  accordingly  be  entitled  to 
retain  the  premium  hy  them  received  in  the  same  manner  as  ij 
no  such  subsequent  assurance  had  been  made. 

This  is  the  American  rule  in  marine  insurance,  and  it  differs 
from  the  rule  in  fire  insurance,  and  also  differs  from  the  Eng- 
lish marine  rule,  under  which  all  policies  share  proportionately 
in  the  interest  irrespective  of  the  dates  when  they  were  sub- 
scribed, unless  there  is  some  stipulation  to  the  contrary.^ 

This  difference  in  the  laws  of  different  countries  is  incon- 
venient and  leads  to  confusion  when  part  of  an  interest  happens 
to  be  insured  in  one  country  and  part  in  another. 

It  is  a  general  principle  of  law  that  fractions  of  a  day  are 
not  regarded,  but  if  two  or  more  policies  are  made  on  the  same 
day,  insuring  the  same  property  against  the  same  risks,  and  the 
question  of  priority  is  material,  this  priority  will  be  determined 
by  ascertaining  at  what  time  on  that  day  the  first  was 
made.' 

Priority  is  determined  according  to  the  time  of  effecting 
the  insurance  rather  than  the  inception  of  the  risk,  and  for  this 
purpose  the  written  date  of  the  policy  is  not  conclusive.^ 

This  clause  of  the  policy  is  only  applicable  to  other  or 
double  insurance,  which  has  been  already  explained. 

It  is  sometimes  expressly  stipulated  that  other  insurance  of 
the  same  date  as  the  policy  in  question  shall  be  deemed  simul- 
taneous therewith.  If  the  property  is  fully  covered  by  the 
prior  insurance,  the  subsequent  insurance  does  not  attach  ;  but 
it  has  been  held  that  if  the  prior  for  any  reason  fails  during 
the  term  of  the  subsequent  insurance,  the  latter  may  then 
attach,  but  not  if  it  is  because  the  first  company  becomes 
insolvent.* 

If  all  the  policies,  or  several  of  them,  of  different  dates  do 
once  attach,  and  the  property  is  diminished  below  their  aggre- 
gate amount  during  their  life,  the  question  arises  whether  the 
insurance  shall  abate  j^ro  rata  on  all  the  policies,  or  first  on  the 
latest  policies.     On  principle,  the  former  rule  would  seem  to  be 

'  American   Tns.    Co.    v.    Griswold,  *  Lee  v.  Mass.  Ins.  Co.,  6  Mass.  308 

i4  Wend.  899.  ■•  Kent  v.  Manufacturers'  Ins.  Co.,  18 

*  Potter  V.  Marine  Ins.  Co.,  2  Mason  Pick    19.     Ryder  v.  Phoenix  Ins.  Co., 

470.  98  Mass.  186. 


§  231  Free  of  Capture.  255 

the  more  satisfactory,  though  tliere  is  a  decision  to  the  con- 
trary.^ 

The  effect  of  violating  a  provision  against  other  insurance 
has  been  considered  in  connection  with  the  clauses  of  the  fire 
policy. 

§  331.  Warranted  Free  of  Capture. — The  meaning 
of  the  term_^^jvarranted.JEree,''  when  employed  to  introduce  an 
exception  to  the  underwriters'  liability,  is  to  guarantee  that 
the  interest  insured  shall  be  free  from  any  of  the  excepted 
perils  as  a  cause  of  loss  for  which  the  underwriter  is  responsi- 
ble. This  kind  of  warranty  means  that  although  the  general 
terms  of  the  policy  would  have  covered  the  peril,  yet  consider- 
ing the  special  hazard  incident  to  the  particular  subject,  the 
underwriters,  unless  they  are  paid  the  premium  for  consenting 
to  take  it,  do  not  choose  to  be  liable  for  the  risk. 

The  words  "capture"  and  "seizure"  are  not  to  be  under- 
stood as  having  sole  reference  to  the  acts  of  belligerents.  It  is 
true  that  the  proper  meaning  of  the  word  "  capture  "  is,  as 
already  stated,  a  hostile  taking  with  intent  to  keep  ;  but  this 
signification  is  extended  by  the  addition  of  the  word  "  seizure," 
the  ordinary  and  natural  meaning  of  which  is  a  forcible  taking 
possession,  however  effected.^ 

Thus  a  ship  had  got  ashore  on  the  west  coast  of  Africa, 
where  she  was  boarded  by  natives,  who,  after  plundering  the 
vessel,  left  her  in  such  a  condition  that  she  was  abandoned  as 
not  worth  repairing.  In  an  action  for  the  loss  thus  caused  it 
was  found  by  the  jury  that  the  natives  took  possession  of  the 
ship  to  plunder  the  cargo,  and  not  for  the  purpose  of  keeping 
her,  but  it  was  held  by  the  court  that  this  seizure,  though  only 
temporary,  was  a  seizure  within  the  meaning  of  the  words  in 
the  guaranty,  and  that  the  underwriters  were  consequently 
exonerated.^ 

The  words  "capture  "  and  "  seizure  "  occurring  in  juxtaposi- 
tion will  therefore  be  understood  to  include  every  forcible  pro- 
ceeding, arising  out  of  the  perils  insured,  whereby  the  assured 

'  American  Ins.  ("o.  v.  GriswoJd,  14       "  Johnston  t.  Hogg,  5    Asp.  Mar. 
Wend.  399.  L.  C,  51. 

'  Johnston  t.   Hogg,  6  Asp.   Mar. 
L.  C.  53. 


256  Insurance  :    Fire,  Life,  Marine.  §  232 

is  deprived  of  the  control  or  possession  of  his  property,  whether 
such  proceedin^g  be  permanent  or  only  temporary  in  effect,  and 
whether  it  be  the  act  of  an  enemy,  a  friendly  power  mistaking 
the  vessel  for  an  enemy,^  mutinous  passengers,^  or  a  lawful 
authority,  with  the  exception  of  piratical  seizure,  where  that 
exception  is  made  in  the  policy.* 

/  If  the  liability  of  the  insurers  depends  upon  the  legality  of 
the  seizure,  this  legality  must  be  determined  by  the  govern- 
ment of  the  country  to  which  the  vessel  belongs,  and  the 
courts  of  such  country  must  recognize  as  conclusive  the  claims 
of  the  executive  branch  of  their  government  in  regard  to  the 
sovereignty  of  any  island  or  country  and  the  right  of  a  vessel 
to  be  in  its  waters/ 

§  233.  The   Memorandum  Clause. — The  exemption 

of  this  clause  is  not  applicable  to  total  loss  nor  to  losses  calling 
for  general  average  contribution,  for  which,  in  spite  of  it,  the 
underwriters  are  liable ;  nor  in  Lloyd's  form  of  policy  is  it 
applicable  in  the  case  of  the  stranding  of  a  ship. 

Average  properly  signifies  a  proportionate  or  eouitable  dis- 
tribution. 

This  word  is  loosely  employed  both  in  law  and  in  the  trade 
of  insurance,  and  care  is  needed  to  escape  confusion.  As  here 
used  it  means  partial  loss.^  "  Free  of  average  unlsss  general 
or  the  ship  be  stranded,"  has  been  construed  to  mean,  "  Free 
of  average  except  general,  or  unless  the  ship  be  stranded;" 
that  is,  the  underwriters,  if  such  is  the  form  of  exemption,  are 
free  from  all  average  or  partial  loss  on  the  articles  named,  if  not 
a  general  average  loss,  and  they  are  liable  for  all  partial  loss  on 
the  articles  named  in  case  the  ship  be  stranded,  no  matter 
whether  the  stranding  caused  the  damage  or  not.^ 

The  damage  may  even  have  been  discovered  and  repaired 
before  the  stranding  takes  place,  but  nevertheless  the  under- 
writers would  be  liable.  A  stranding  at  any  time  during  the 
term   insured  has  the  effect  of  a  condition,   and   effaces   the 

»  Powell  V.  Hyde,  5  El.  &  B.  607.  *  Williams  v.   Suffolk  Ins.   Co.,    18 

»  Klein  wort  v.  Shepard,  1  El.  &  El.  1'et.  415. 

447.  ''  Wadsworth   v.    Pacific  Tns.  Co.,  4 

•  Swinnerton  v.  Columbian  lus.  ''o.,  Wend.  :i3. 

87  N.  Y   174  ;  s.  c,  93  Am.  Dec.  500.  "  Burnett  v.  Kensington, 7  T.  li.  210. 


§  282  Memorandum  Clause.  257 

remainder  of  the  clause.     By  average  unless  general  is  meant 
particular  average.* 

The  terra  pai-ticular  average  is  confined  to  the  deterioration 
or  actual  loss  of  part  of  the  subject  insured.  Whence  it  fol- 
lows that  the  percentages  specified  in  the  memorandum  must 
be  similarly  confined  as  regards  their  composition.  Accord- 
ingly, neither  general  average,  particular  charges,  nor  the  extra 
charges  incurred  to  substantiate  a  claim  on  underwriters  are 
admissible  to  form  part  of  the  amount  requisite  to  constitute 
a  claim  for  the  particular  average,  which  must  be  composed  ex- 
clusively of  the  loss,  consisting  either  in  the  deterioration  or 
actual  destruction  of  a  part  of  the  subject  insured  b}^  the  oper- 
ation of  the  perils  insured  against.^ 

Expenses  incurred  to  restore  goods  to  their  proper  state 
which  have  arrived  at  their  destination  in  a  sea-damaged  con- 
dition are  admitted  to  make  up  the  percentage  of  a  claim  for 
particular  average,  and  are  payable  by  the  underwriters  when, 
either  alone  or  in  conjunction  with  other  partial  loss,  they 
amount  to  the  requisite  percentage.  The  earlier  cases  held  that 
under  the  restriction  of  the  memorandum  clause,  the  under- 
writers would  not  be  liable  for  a  total  loss  unless  actual  as  con- 
trasted with  constructive.^  The  later  cases  would  seem  to 
point  out  a  contrary  rule  upon  this  important  point,* 

Where  the  exemption  in  the  policy  is  worded,  "  free  of  par- 
tial loss,"  the  Massachusetts  court  is  of  opinion  that  the  under- 
writers are  liable  for  a  constructive  total  loss  as  well  as  for  an 
actual  total  loss.' 

Total  physical  loss  is  not  necessary,  but  only  total  loss  of 
value  to  the  owner,  in  order  to  constitute  total  loss.  Conse- 
quently, when  the  exemption  clause  is  worded,  "  free  of  partic- 
ular average  only,"  the  underwriters  are  liable  if  there  has 
been  a  justifiable  abandonment  for  a  total  loss  of  value,  though  /  rv 
some  of  the  goods  may  ultimately  be  saved  and  brought  into  €" 
port  in  specie.^   Whether  the  court  in  the  Wallerstein  case 

»  Wright  V.  Williams,  20  Hun,  320.  Mayo  v.  India  Mut.  Ins.  Co.,  152  Mass. 

'  Price  V.  Ins.  Ass.,  L.  R.  22,  Q.  B.  D.  172  (1890). 

580  (1889).  »  Mayo  v.  India  Mut.  Ins.  Co.,  158 

•  Burt  V.  Brewers  &  Malts.  Ins.  Co.,  Mass.  172  (1890). 

9  Hun,  3:-!3  ;  affirmed  but  not  involv-       "  Wallerstein  v.  Columbian  Ins.  Co., 
ing  this  point  in  78  N.  Y.  400.  44  N.  Y.  204;  s.  c,  4  Am.  Rep.  604. 

•  Chadsey  v.   Guion,  97  N.  Y.  333.   Ins.  Co.  v.  Fogarty,  19  Wall.  640.       p  ^ 

17  "" "        ^(T/ 


258  Insi:kanok:    Fike,  Life,  Marine.  §233 

considered  the  loss  actually  or  constructively  total  is  not  alto- 
gether clear.  But  the  exemption  relieves  the  underwriters, 
unless  there  has  been  either  a  total  or  a  constructive  loss  of 
the  entire  cargo  insured.  Hence  when  the  ship  sank  and 
was  lost,  but  before  the  loss  a  portion  of  the  cargo  had 
been  safely  delivered,  no  recovery  was  permitted  against 
the  underwriters.^  If  a  ship  is  afloat,  or  it  is  practicable  to 
put  her  afloat,  or  if  she  is  in  such  a  condition  that  she  is 
capable  of  being  repaired  at  any  expense,  she  cannot  be  held  to 
be  "an  actual  total  loss ; "  but  the  underwriters  may  take  pos- 
session of  her  under  a  rescue  clause  in  such  a  case,  and  con- 
vert the  loss  into  "  an  actual  total  loss."  ^  Under  the  exemption, 
"  free  from  average  unless  general,"  or  liable  "  for  total  loss 
only,"  the  underwriter  is  not  accountable  for  a  partial  loss  of 
any  one  species  of  goods,  except  for  general  average,  although 
separate  boxes  or  packages  of  such  species  may  be  totally  lost.' 
In  order  to  mitigate  the  severity  of  this  rule,  it  is  usual  to 
insert  what  are  called  "average  clauses,"  the  effect  of  which  is 
to  subdivide  the  subject  matter  insured,  whether  ship  or  cargo, 
into  smaller  parcels,  so  as  to  give  the  assured  a  chance  of  re- 
covery in  case  this  or  that  portion  be  seriously  damaged  while 
the  bulk  is  uninjured.  For  example,  with  cotton  a  clause  may 
be  inserted,  "  average  payable  on  every  ten  bales  running 
landing  numbers."  This  means  that  if  in  any  parcel  of  ten 
bales,  as  they  are  entered  in  the  dock  landing  book,  there  is  a 
damage  above  the  memorandum  restriction,  the  insured  may 
recover,  although  the  damage  on  the  entire  bulk  of  that  species 
of  goods  named  in  the  policy  would  fall  below  the  memoran- 
dum percentage  of  its  value. 

§  233.  What  Constitutes  Stranding. — A  vessel  is 
stranded  within  the  meaning  of  the  memorandum  clause,  "  free 
of  average  unless  the  ship  be  stranded,"  when,  in  consequence 
of  some  unusual  or  accidental  occurrence,  she  comes  in  contact 
with  the  ground  or  other  obstruction,  and  remains  hard  and 
fast  upon  it.^ 

In  examining  the  conditions  which  are  necessary  to  consti- 

'  Chadsey  v.  Guion,  97  N.  Y.  333.  '  Chadsey  v.  Guion.  97  N.  Y.  333. 

»  Carr  v.  Security  Ins.  Co.,  1U9  N.  Y.       *  McDougle  v.  Royal  Exchange  As- 
504.  surance,  4  Camp.  283. 


§  233  Stranding.  259 

tute  such  a  stranding,  we  have  first  to  notice  that  a  literal  lying 
upon  the  strand  is  not  essential ;  for  whether  the  ship  be  cast 
upon  the  shore  of  the  sea,  the  bank  of  a  river,  a  rock,  a  heap  of 
stones  or  rubbish,  piles  driven  into  the  shore,  or  the  wreck  of 
another  vessel,  is  immaterial,  so  long  as  she  comes  into  contact 
with  and  remains  resting  upon  some  hard  substance  in  the 
manner  about  to  be  described. 

Two  specific  features  are  necessary  in  order  that  a  ground- 
ing may  amount  to  a  stranding  within  the  meaning  of  the 
memorandum  ;  first,  it  is  essential  to  constitute  a  stranding 
that  the  grounding  should  be  accidental — not  one  that  occurs 
in  the  ordinary  course  of  navigation.  To  determine  whether 
a  grounding  was  ordinary  or  extraordinary,  inquiry  must  be 
made  as  to  whether  the  ship  took  the  ground  in  the  accus- 
tomed  place  and  manner,  and  in  a  tidal  harbor  upon  the  ebb  of 
the  tide,  or  whether  she  took  the  ground  in  an  unusual  place 
or  manner,  owing  to  the  happening  of  something  fortuitous. 
The  circumstance  that  the  damage  was  or  was  not  sustained 
by  the  ship  or  cargo  through  taking  the  ground,  is  in  general 
immaterial  in  deciding  as  to  the  ordinary  or  extraordinary 
character  of  the  grounding.^  Circumstances  of  an  extraordi- 
nary nature  occurring  in  connection  with  an  ordinary  ground- 
ing will  not  convert  that  class  of  grounding  into  a  stranding, 
unless  they  affect  the  mode  in  which  the  vessel  takes  the 
ground. 

A  vessel  grounded  at  Dunkirk  merely  through  the  ebbing 
of  the  tide,  but  after  she  had  settled  it  was  found  that  she  had 
received  injury  by  striking  upon  some  hard  substance.  The 
court,  while  allowing  that  any  damage  caused  to  ship  or  goods 
by  this  accident  would  be  attributable  to  perils  of  the  seas, 
held  that  the  ordinary  character  of  the  grounding  was  not 
removed  thereby.^ 

A  different  conclusion  was  arrived  at  in  a  case  where  the 
mode  of  taking  the  ground  was  affected  by  an  accident.  Thus 
a  vessel  had  grounded  in  the  usual  place  and  manner  in  a  tidal 
river,  but  had  afterwards,  owing  to  the  stretching  of  a  rope, 
been  moved  somewhat  astern  by  the  force  of  the  wind,  so  that 
she  came  into  contact  with  a  heap  of  rubbish  and  sustained 

'  Hearne  v.  Edmunds,    1    Brod.  &        '  Kingsford  v.    Marshall,    8    Bing 
Bing.  388.  458. 


260  Insurance  :    Fire,  Life,  Marine.  §  233 

damage.  This  was  held  to  be  a  stranding  within  the  meaning 
of  the  memorandum.'  Where  a  vessel,  which  was  moored  in 
a  tidal  harbor,  fell  over  antl  was  stove  in  on  the  ebb  of  the 
tide  because  the  rope  by  which  she  was  lashed  was  of  insuffi- 
cient strengtli ;  this  was  also  held  to  be  a  stranding.-  Where, 
by  a  temporary  change  of  circumstances,  however  caused,  the 
bottom  of  a  river  or  harbor  is  in  a  particular  place  in  a  condi- 
tion different  from  its  ordinar}^  condition,  and  thereby  a  vessel 
intendetl  to  take  the  ground  comes  in  contact  with  the  ground 
at  that  place  in  a  different  manner  from  usual,  that  is  a  strand- 
ing within  the  memorandum.  Accordingly,  a  vessel  was  held 
to  have  stranded  where,  in  taking  the  ground  in  a  tidal  harbor, 
instead  of  resting  upon  an  even  keel,  she  pitched  by  the  head 
into  a  hole,  which  had  been  caused  by  the  paddles  of  steamers 
in  leaving  the  harbor  at  low  tide,  and  the  existence  of  which 
had  not  previously  been  discovered.^ 

The  second  essential  feature  in  the  constitution  of  a  strand- 
ing is  that  the  grounding  must  amount  to  a  settling  down 
upon  the  obstruction,  as  opposed  to  a  mere  "  touch  and  go." 
A  striking  of  the  ship  upon  the  ground,  however  violent,  will 
not  of  itself  suffice  to  constitute  a  stranding,  nor  will  a  mere 
temporary  stoppage  of  the  ship's  way.  In  practice  it  is 
deemed  sufficient  to  amount  to  a  stranding  if  a  vessel  is  hard 
and  fast,  without  reference  to  the  extent  of  her  surface  which 
is  in  actual  contact  with  the  obstruction. 

No  definite  period  can  be  fixed  as  the  time  during  which 
a  vessel  must  remain  quiescent  in  order  to  have  stranded.  In 
one  case  which  came  before  the  courts,  it  appeared  that  the 
vessel  had  struck  upon  a  rock,  and  after  remaining  for  a  minute 
and  a  half,  had  floated  off  and  proceeded  upon  her  A^oyage.  It 
was  held  by  Lord  Ellenborough  that  this  detention  was  insuf- 
ficient ;  for  a  stranding  meant  lying  on  the  shore  or  something 
analogous  to  that.  If  it  is  merely  ''touch  and  go"  with  the 
ship,  there  is  no  stranding.  Every  striking  must  necessarily 
produce  a  retarding  of  the  ship's  motion.  If  by  the  force  of 
the  elements  she  is  run  aground,  and  becomes  stationary,  it  is 
immaterial  whether  this  be  on  piles,  or  on  the  muddy  bank  of 

'  Wells   T.  Hopwood,  8  B.  &  Adol.        '  Letchford  v.  Oldham,  L.  R.,  6  Q. 
aO.  B.  D.  538. 

*  Bishop  V.  Pentland,  7  B.  &  C  319. 


§  235  Cargo  on   Deck.  261 

a  river,  or  on  the  rocks,  or  on  the  seashore.  But  a  mere  strik- 
ing will  not  do,  no  matter  where  that  may  happen.'  As  a 
mere  striking  the  ground  with  a  temporary  stoppage  will  not 
suffice  to  constitute  a  stranding,  neither  will  it  suffice  if  the 
ship  be  dragged  through  the  mud,  or  if  she  pass  over  a  bar 
bumping  at  intervals  ;  but  if  she  is  forced  ashore  or  driven  on 
a  bank,  and  remains  for  any  time  on  the  ground,  that  consti- 
tutes a  stranding  without  reference  to  the  degree  of  damage 
she  may  thereby  sustain.  The  shortest  time  which  has  been 
allowed  by  the  English  courts  as  sufficient  to  amount  to  a 
stranding,  occurred  in  a  case  where  it  appeared  that  the  vessel 
had  struck  upon  a  rock  and  remained  from  fifteen  to  twenty- 
minutes.  This  was  deemed  a  sufficiently  long  detention  upon 
the  ground  to  comply  with  the  condition.^  Where  a  vessel  is 
intentionally  run  ashore,  as,  for  instance,  to  keep  her  from  sink- 
ing, the  grounding  is  equally  a  stranding  as  where  it  is  purely 
accidental.^ 

The  voluntary  stranding  of  a  ship  in  the  presence  of  an 
extreme  peril  is  not,  by  the  rule  prevailing  in  England,  a 
general  average  act  which  calls  for  general  contribution  from 
the  other  interests ;  but,  as  we  have  already  observed,  the  rule 
is  otherwise  in  the  United  States^ 

§  234.  Cargo  on  Deck. — Cargo  on  deck  is  not  covered 
hy  this  policy  unless  specially  indorsed  hereon'  in  all  cases  to  he 
free  from  loss  hy  wet,  hreaJiage,  leaTiage,  or  exposure. 

The  general  rule  in  regard  to  deck  load,  and  the  effect  of 
custom  upon  it,  have  been  already  considered. 

Although  not  entitled  to  protection  by  the  terms  of  the 
policy,  the  deck  load,  if  benefited  by  a  general  average  act, 
must  contribute  its  share  together  with  the  other  interests. 

§  235.  Blockade. —  Warranted  not  to  ahandon  in  the 
case  of  blockade,  and  free  from  any  experise  in  consequence  of 
capture,  seizure,  detention,  or  hlockade,  hut  in  the  event  of 
hlockade,  to  he  at  liberty  to  proceed  to  an  open  port  and  there 
end  the  voyage. 

'  McDougle  V.  Royal  Exchange  As-        '  Bowring  v.  Elmslie.    7  T.  R.  216. 
surance,  4  Camp.  'ZSZ.  ^    olumbian  Ins.  <  o.  v.  Ashby,  13 

«  Bater  v.  Towry,  1  Stark.  436.  Peters,  331.   §taretHope,  9  Wall.^08». 


262  Insurance:  Fire,  Ltfe.  Marine.  §236 

This  expressly  limits  a  liability  which  would  otherwise  be 
imposed  upon  the  insurers  by  the  general  terms  of  the  body  of 
the  policy,  as  has  been  already  explained  in  detail. 

§  336.  Average  Distingviishecl  from  Salvage  Loss. 

— A  particular  average  on  goods  consists  either  in  a  deteriora- 
tion or  total  loss  of  part  of  the  subject  insured  by  the  operation 
of  the  perils  insured  against. 

It  is  requisite  to  distinguish  between  a  particular  average 
and  a  salvage  loss  on  goods,  as  some  confusion  has  occurred  in 
the  use  of  these  terms,  A  salvage  loss  is  a  total  loss  diminished 
by  salvage,  and  takes  place,  in  relation  to  goods,  when  there  is 
either  an  absolute  or  a  constructive  total  loss  of  the  subject  in- 
sured, but  some  remains  of  the  property  have  been  recovered 
by  the  assured.  In  that  case  the  claim  upon  the  underwriters 
is  for  the  difference  between  the  insured  value  and  the  net  pro- 
ceeds ;  and  the  latter  are  computed  by  deducting  from  the 
gross  proceeds  of  the  property  saved  all  charges  incurred  in 
realizing  the  salvage.  In  short,  as  it  has  been  concisely  put  by 
Stevens,  the  merchant  "  receives  the  net  proceeds  from  the  per- 
son who  effects  the  sales,  and  the  balance  from  the  under- 
writer." 

Where  only  a  part  of  the  subject  insured  is  sold  short  of  its 
destination,  the  remainder  being  delivered  there,  the  claim, 
though  stated  in  practice  after  the  manner  of  a  salvage  loss,  is 
in  principle  one  for  particular  average,  which  is  proved  by  the 
fact  that  it  is  excluded  by  a  warranty  to  be  "  free  from  average, 
unless  general."  ^  If  goods  arrive  in  specie  at  their  port  of  des- 
tination sea-damaged  and  with  the  marks  obliterated,  so  that 
they  cannot  be  delivered  to  their  respective  owners,  there  is 
nevertheless  no  claim  for  total  loss  under  such  circumstances, 
for  the  owners  of  the  goods  are  tenants  in  common  of  the  mass, 
and  the  claim  is  to  be  stated,  according  to  the  rules  of  partic- 
ular average,  as  on  goods  which  have  arrived  at  their  destina- 
tion.2 

§  337.  Riders. — A  variety  of  forms  of  policies  are  in  use 
both  in  ocean  marine  and  inland  marine  insurance,  and  a  great 

'  Ralli    V.    Jaason,    6    El.    &    B.       '^  Spence  v.    Union  Mar.  Ins.   Co., 
422.  L.  R.,  3  C.  P.  42Z 


§  238  Adjustment.  ^63 

number  of  special  clauses  have  been  framed,  and  such  clauses 
are  often  attached  in  the  form  of  riders,  sometimes  for  the  pur- 
pose of  restraining  and  sometimes  for  the  purpose  of  extending 
the  liability  of  the  underwriters  for  special  purposes. 

§  238.  Adjustment. — The  details  of  the  adjustments  of 
marine  losses  between  the  insurers  and  the  insured  are  fre- 
quently a  matter  of  great  complication,  and  for  the  most  part 
are  put  into  the  hands  of  professional  experts  called  average 
adjusters.  The  adjusters  make  up  an  account,  apportioning  the 
loss  according  to  the  respective  rights  of  the  different  interests. 
If  there  are  general  average  losses,  these  must  be  included  ;  but 
if  there  has  been  a  general  average  adjustment  in  a  foreign 
port  between  the  parties  primarily  interested  in  it,  to  wit,  the 
owners  of  ship,  cargo,  and  freight  respectively,  then  the  results 
arrived  at  in  that  adjustment  are  taken  as  conclusive  and  incor- 
porated into  the  adjustment  between  the  insurers  and  the  in- 
sured. The  professional  adjuster  is  supposed  to  act  in  a  judicial 
rather  than  in  a  partisan  capacity,  but  his  adjustment  is  not 
binding  upon  any  of  the  parties  unless  by  special  agreement. 
In  practice  the  adjustment  is  generally  made  the  basis  of  an 
amicable  settlement  among  the  different  interests,  and  law-suits 
are  not  as  common  over  marine  adjustments  as  in  other 
branches  of  insurance  business.  On  the  arrival  of  the  ship  and 
cargo  partially  damaged,  the  master  or  owner  of  the  ship  ad- 
vertises for  bids  for  repairs.  Bids  are  accepted,  the  survey  of 
damage  is  made,  and  contracts  for  rebuilding  executed.  These, 
with  the  bills  of  lading  or  invoices,  the  freight  manifest,  the 
charter  party,  the  policies  of  insurance,  and  any  other  proofs  of 
loss,  furnish  the  adjuster  with  the  necessary  material  for  mak- 
ing up  his  account. 

After  a  loss  has  been  adjusted  and  paid,  the  policy  becomes 
merged  in  the  adjustment,  and  the  insurers  cannot  thereafter 
avail  themselves  of  any  defence,  which  they  might  have  had 
under  the  policy  as  a  ground  for  opening  the  adjustment ;  but 
for  fraud  in  obtaining  the  adjustment  itself  relief  can  be  ob- 
tained.* This  principle  is  applicable  to  adjustments  in  all 
branches  of  insurance  law. 


»  Smith  V.  Glens  Falls  Ins.  Co.,  63  N.  Y.  85. 


uA 


MMy'v 


I  LT  i  ■' 


PART    SEOOND. 

UL&JDING    ILLUSTRATIVE    OASPS^« 


CHAPTER  I. 

two  of  the  earlier  english  oases. 

Court  of  King's  Bench,  1777. 
TYRIE  V.  FLETCHER. 

(Cowp.  666.) 

The  contract  of  insurance  is  an  entirety.  If  the  risk  does  not  attach  the  pre 
mium  is  returnable,  but  if  it  attaches  at  all  the  premium  cannot  be  appor 
tioned. 

This  was  an  action  on  the  case,  for  money  had  and  received 
to  the  plaintiff's  use,  brought  by  the  plaintiff,  the  insured  in  a 
policy  of  insurance,  against  the  defendant  the  underwriter,  for 
a  return  of  part  of  the  premium. 

The  cause  was  tried  before  Lord  Mansfield,  at  Guildhall,  at 
the  sittings  after  last  Trinity  term,  when,  by  consent,  a  verdict 
was  found  for  the  plaintiff,  subject  to  the  opinion  of  the  court 
upon  the  question,  whether,  under  the  circumstances  of  the 
case,  a  proportionable  part  ought  to  be  returned  or  not.  If 
the  court  should  be  of  opinion  that  a  proportionable  part  of 
the  premium  ought  to  be  returned,  then  a  nonsuit  was  to  be 
entered. 

It  now  came  before  the  court,  upon  a  rule  to  show  cause 
why  a  nonsuit  should  not  be  entered ;  and  the  cause,  as  it 
appeared  from  the  report,  was  shortly  this :  The  policy  of 
insurance  was  upon  the  ship  Isabella,  at  and  from  London  to 

•  The  chapters  of  Part  Second  are  illustrative  ot  the  corresponding  chap> 
ters  of  Part  First,  and  should  be  read  in  connection  with  them. 


266  Insurance:   Fire,  Life,  Marine,  o.  i 


any  port  or  place  where  or  whatsoever,  for  twelve  months, 
from  19th  of  August,  1776,  to  19th  of  August,  1777,  both 
days  inclusive,  at  £9  per  cent.,  warranted  free  from  captures 
and  seizures  by  the  Americans,  and  the  consequences  thereof. 
In  all  other  respects  it  was  in  the  common  form,  against  all 
perils  of  the  sea,  etc. 

The  ship  sailed  from  the  port  of  London,  and  was  taken  by 
an  American  privateer  about  two  months  afterward. 

Lord  Mansfield,  C.  J. — It  was  very  proper  to  save  this 
case  for  the  opinion  of  the  court,  because  in  all  mercantile 
transactions  certainty  is  of  much  more  consequence  than 
which  way  the  point  is  decided,  and  more  especially  so  in 
the  case  of  policies  of  insurance ;  because,  if  the  parties  do  not 
choose  to  contract  according  to  the  established  rule,  they  are 
at  liberty  between  themselves  to  vary  it. 

This  case  is  stripped  of  every  authority.  There  is  no  case 
or  practice  in  point ;  and  therefore  we  must  argue  from  the 
general  principles  applicable  to  all  policies  of  insurance.  And, 
I  take  it,  there  are  two  general  rules  established  applicable  to 
this  question.  The  first  is,  that  where  the  risk  has  not  heen  run, 
whether  its  not  having  heen  run  was  owing  to  the  fault,  pleasu7'e^ 
or  will  of  the  insured,  or  to  any  other  cause,  the  premium  shall 
he  returned,  because  a  policy  of  insurance  is  a  contract  of  in- 
demnity. The  underwriter  receives  a  premium  for  running 
the  risk  of  indemnifying  the  insured ;  and  whatever  cause  it  be 
owing  to,  if  he  does  not  run  the  risk,  the  consideration  for 
which  the  premium  or  money  was  put  into  his  hands  fails,  and 
therefore  he  ought  to  return  it.  (2)  Another  rule  is,  that  if 
that  risk  of  the  contract  of  indemnity  has  once  commenced,  there 
shall  he  no  apportionment  or  return  of  premiuyn  afterioard. 
For  though  the  premium  is  estimated,  and  the  risk  depends 
upon  the  nature  and  the  length  of  the  voyage,  yet  if  it  has 
commenced,  though  it  be  only  for  twenty-four  hours  or  less, 
the  risk  is  run  ;  the  contract  is  for  the  whole  entire  risk,  and  no 
part  of  the  consideration  shall  be  returned  ;  and  yet  it  is  as  easy 
to  apportion  for  the  length  of  the  voyage,  as  it  is  for  the  time. 
If  a  ship  had  been  insured  to  the  East  Indies  agreeably  to  the 
terras  of  the  policy  in  this  case,  and  had  been  taken,  twenty- 
four  hours  after  the  risk  was  begun,  by  an  American  captor, 


b.  i.  Tyrie  v.  Flktcher.  ^67 

there  is  not  a  color  to  say  that  there  should  have  been  a 
return  of  the  premium.  So  much,  then,  is  clear,  and  indeed 
perfectly  agreeable  to  the  ground  of  determination  in  the  case 
of  Stevenson  v.  Snow,  3  Burr.  1237  ;  for  in  that  case  the  inten- 
tion of  the  parties,  the  nature  of  the  contract  and  the  conse- 
quences of  it,  spoke  manifestly  two  insurances  and  a  division 
between  them.  The  first  object  of  the  insurance  was  from 
London  to  Halifax,  but  if  the  ship  did  not  depart  from  Ports- 
mouth with  convoy  (particularly  naming  the  ship  appointed  to 
be  convoy),  then  there  was  to  be  no  contract  from  Portsmouth 
to  Halifax.  Why,  then,  the  parties  have  said,  ''  We  make  a 
contract  from  London  to  Halifax,  but  on  a  certain  contingency 
it  shall  only  be  a  contract  from  London  to  Portsmouth."  That 
contingency  not  happening  reduced  it,  in  fact,  to  a  contract 
from  London  to  Portsmouth  only.  The  whole  argument 
turned  upon  that  distinction.  Mr.  Yates,  who  was  for  the 
plaintiff,  put  it  strongly  upon  that  head ;  and  all  the  judges,  in 
delivering  their  opinion,  lay  the  stress  upon  the  contract  com- 
prising two  distinct  conditions,  and  considering  the  voyage  as 
being,  in  fact,  two  voyages :  and  it  was  the  equitable  way  of 
considering  it ;  for,  though  it  was  at  first  consolidated  by  the 
parties,  there  was  a  defeasance  afterwards,  though  not  in 
words.  I  think  Mr.  Justice  Wilraot  put  it  particularly  upon 
that  ground,  but  it  was  the  opinion  of  the  whole  court.  There 
was  a  usage,  also,  found  by  the  jury  in  that  case,  that  it  was 
customar}'^  to  return  a  proportionable  part  of  the  premium  in 
such-like  cases,  but  they  could  not  say  what  part.  The  court 
rejected  this  as  a  usage  for  the  uncertainty  ;  but  they  argue 
from  it,  that  there  being  such  a  custom  plainly  showed  the  gen- 
eral sense  of  merchants  as  to  the  propriety  of  returning  a  part 
of  the  premium  in  such  cases.  And  there  can  be  no  doubt  of 
the  reasonableness  of  the  thing. 

There  has  been  an  instance  put  of  a  policy  where  the 
measure  is  by  time,  which  seems  to  me  to  be  very  strong,  and 
apposite  to  the  present  case  ;  and  that  is  an  insurance  for  a 
man's  life  for  twelve  months.  There  can  be  no  doubt  but  the 
risk  there  is  constituted  by  the  measure  of  time,  and  depends 
entirely  upon  it ;  for  the  underwriter  would  demand  double 
the  premium  for  two  years  that  he  would  take  to  insure  the 
same  life  for  one  year  only.     In  such  policies  there  is  a  general 


268  Insuranoe  :   Fire,   Life,  Maiiine.  0.  I. 

exception  against  suicide.  If  the  person  puts  an  end  to  his 
own  life  the  next  day,  or  a  month  after,  or  at  any  other  period 
within  the  twelve  months,  there  never  was  an  idea  in  any 
man's  breast  that  part  of  the  premium  should  be  returned. 

A  case  of  general  practice  was  put  by  Mr.  Dunning,  where 

the  words  of  the  policy  are,  "  At  and  from ,  provided 

the  ship  shall  sail  on  or  before  the  1st  of  August;"  and  Mr. 
"Wallace  considers,  in  that  case,  that  the  whole  policy  would 
depend  upon  the  ship  sailing  before  the  stated  day.  I  do  not 
think  so  ;  on  the  contrary,  I  think,  with  Mr.  Dunning,  that  can- 
not be.  A  loss  in  port  before  the  day  appointed  for  the  ship's 
departure  can  never  be  coupled  with  a  contingency  after  the 
day ;  but  if  a  question  were  to  arise  about  it,  as  at  present 
advised,  I  should  incline  to  be  of  opinion  that  it  would  fall 
within  the  reasoning  of  the  determination  in  Stevenson  v.  Snow, 
and  that  there  were  two  parts  or  contracts  of  insurance,  with 
distinct  conditions.  The  first  is,  I  insure  the  ship  in  port,  pro- 
vided she  is  lost  in  port  before  the  1st  of  August ;  and  sec- 
ondly, if  she  is  not  lost  in  port,  I  insure  her  then  during  her 
voyage  from  the  1st  of  August  till  she  reaches  the  port  speci- 
fied in  the  policy.  The  loss  in  port  must  happen  before  the 
risk  on  the  voyage  could  commence  ;  and,  vice  versa,  the  risk 
in  port  must  cease  the  moment  the  risk  upon  the  voyage  began. 

Let  us  see,  then,  what  the  agreement  of  the  parties  is  in  the 
present  case.  They  might  have  insured  from  two  months  to 
two  months,  or  in  any  less  or  greater  proportion,  if  they  had 
thought  proper  so  to  do.  But  the  fact  is,  that  they  have  made 
no  division  of  time  at  all ;  but  the  contract  entered  into  is  one 
entire  contract  from  the  19th  of  August,  1YT6,  to  the  19th  of 
August,  1777,  which  is  the  same  as  if  it  had  been  expressly 
said  by  the  insured,  "  If  you,  the  underwriter,  will  insure  me 
for  twelve  months,  I  wiU  give  you  an  entire  sum  ;  but  I  will 
not  have  any  apportionment."  The  ship  sails,  and  the  under- 
writer runs  the  risk  for  two  months  :  no  part  of  the  premium 
then  shall  be  returned.  I  cannot  say,  if  there  had  been  a 
recapture  before  the  expiration  of  the  twelve  months,  that  the 
policy  would  not  have  revived. 

Aston,  J. — This  case  depends  upon  the  words  of  the  policy, 
and  I  am  of  opinion  it  is  one  entire  contract  at  a  certain  gross 


a  I.  Smith  v.  Scott.  269 

sura  of  £9  per  cent,  for  a  certain  period  of  time — viz.,  twelve 
months — and  that  no  division  is  to  be  impHed.  The  determi- 
nation in  Stevenson  v.  Snow  went  expressly  upon  this  consider- 
ation, that  there  were  ttvo  distinct  voyages,  and  no  con- 
sideration received  by  the  insured  for  the  premium  upon  the 
second  voyage;  and  there  certainly  was  not,  for  there  never 
was  any  point  of  time  when  any  risk  was  run  from  Portsmouth. 
In  Bond  V.  Nutt^  the  losses  insured  against  were  distinct,  and 
unconnected  with  each  other:  1st,  a  loss  of  the  ship  in  port,  if 
any  should  happen  there  ;  2d,  a  loss  in  her  passage  home, 
provided  she  sailed  on  a  certain  day.  The  risk  in  some  policies 
may  be  distinct  and  divisible  in  its  nature.  In  the  case  of  an 
insurance  upon  a  life,  the  sum  is  lumped,  and  the  time  is  lumped 
for  the  year.  So  in  this  case,  I  think,  the  contract  is  one  entire 
contract,  and  therefore  that  there  ought  to  be  no  return  of 
premium. 

Mr.  Justice  Willes  and  Mr.  Justice  Ashurst  were  of  the 

same  opinion. 

Nonsuit. 

CouET  OF  Common  Pleas,  1811. 
SMITH  V.  SCOTT. 

(4  Taunt.  126.) 

Tntv/rance  grants  indemnity  for  loss  by  the  perils  specified,  notwithstanding 
that  the  negligence  of  the  assured  or  others  may  contribute. 

This  was  an  action  upon  a  pohcy  of  insurance  upon  the 
ships  Helena  and  Merlin^  at  and  from  the  bay  of  Honduras  to 
their  port  or  ports  of  discharge  in  Great  Britain,  and  a  loss 
was  averred  to  have  happened  to  the  Helena  by  circumstance, 
that,  while  she  was  proceeding  on  her  voyage,  a  certain  other 
ship  on  the  high  seas,  by  and  through  the  force  of  the  winds 
and  waves,  was  carried  and  sailed  against  the  Helena,  without 
any  neglect  or  default  of  the  persons  on  board  the  Helena,  and 
the  Helena  became  lost  and  stranded  by  the  perils  of  the  seas. 
Upon  the  trial  of  the  cause,  at  the  London  sittings,  after 
Trinity  term  1811,  before  Mansfield,  C.  J.,  the  evidence  was, 
that  a  ship  named  the  Margaret  ran  foul  of  the  Helena  by  the 
grossest  neglect ;  for  when,  upon  the  shock  beitig  given,  some 
of  the  Helena^ s  crew  went  on  board  the  Margaret,  they  found 


270  Insukanoe  :   Fire,  Life,  Marine.  o.  L 

only  one  man  on  the  deck,  and  he  was  asleep.  Hereupon  it 
was  objected  by  the  counsel  for  the  def  3ndant,  that  the  occasion 
of  the  injury  was  not  the  perils  of  the  seas,  but  the  gross  neg- 
ligence of  the  crew  of  the  Margaret,  and  that  this  was  a  fatal 
variance  from  the  loss  averred.  The  jury,  however,  found  a 
verdict  for  the  plaintiff,  subject  to  this  point,  which  the  chief 
justice  reserved. 

Accordingly,  Lens,  Serjt.,  on  this  day  moved  for  a  rule  nisi 
to  set  aside  the  verdict  and  enter  a  nonsuit,  adding  that  the 
plaintiff  had  his  remedy  against  the  owners  of  the  Ma/rgaret. 

Mansfield,  C.  J. — I  do  not  know  how  to  make  this  out  not 
to  be  a  peril  of  the  sea.  What  drove  the  Margaret  against  the 
Helena  f  The  sea.  What  was  the  cause  that  the  crew  of  the 
Margaret  did  not  prevent  her  from  running  against  the  other? 
Their  gross  and  culpable  negligence  ;  but  still  the  sea  did  the 
mischief.  It  is  reasonable  enough  that  the  plaintiffs  should 
permit  the  defendant  to  use  their  names  as  plaintiffs  against 
the  owners  or  crew  of  the  Margaret,  so  as  to  recover  whatever 
the  plaintiffs  would  be  entitled  to  as  against  the  Margaret,  and 
to  apply  it  in  diminution  of  their  loss  ;  but  it  would  lead  to 
endless  discussion  if  it  were  required  that  no  cause  except  the 
cause  of  loss  alleged  in  the  declaration  should  be  conducive  to 
the  loss. 

Heath,  J. — If  this  doctrine  were  to  prevail,  it  might  go  still 
further,  and  it  might  be  contended  that,  if  a  master  conducts 
his  ship  so  unskillf uUy  as  to  run  it  on  a  rock,  that  is  not  a  peril 
of  the  sea,  but  a  peril  of  the  unskillfulness  of  the  master. 

Rule  refused. 


CHAPTEK  II. 

GENEBAL   PBINOIPLES. 

Nature  of  the  Contract. 

Exchequer  Chamber,  1854. 
DALBY  V.  INDIA  &  LONDON  LIFE  ASSUR.  CO. 

(15  C.  B.  365.) 
Insurance :  how  far  a  contract  of  indemnity,  and  when   insurable   interest 
must  exist. 

Parke,  B. — This  case  now  comes  before  us  on  a  bill  of 
exceptions  to  the  ruling  of  my  brother  Cress  well  at  nisi  prius. 
It  is  an  action  on  what  is  usually  termed  a  policy  of  life  assur- 
ance, brought  by  the  plaintiff,  as  a  trustee  for  the  Anchor 
Assurance  Company,  upon  a  policy  of  £1,000  on  the  life  of  his 
late  Royal  Highness  the  Duke  of  Cambridge.  The  Anchor 
Life  Assurance  Company  had  insured  the  duke's  life  in  four 
separate  policies — two  for  £1,000  and  two  for  £500  each — 
granted  by  that  company  to  a  Mr.  Wright.  In  consequence  of 
a  resolution  of  their  directors,  they  determined  to  limit  their 
insurances  to  £2,000  on  one  life  ;  and,  this  insurance  exceeding 
it,  they  effected  a  policy  with  the  defendants  for  £1,000  by  way 
of  counter-insurance.  At  the  time  the  policy  was  subscribed 
by  the  defendants,  the  Anchor  Company  had  unquestionably 
an  insurable  interest  to  the  full  amount.  Afterwards  an  ar- 
rangement was  made  between  the  office  and  Mr.  Wright  for 
the  former  to  grant  an  annuity  to  Mr.  Wright  and  his  wife, 
in  consideration  of  a  sum  of  money,  and  of  the  delivering  up 
the  four  policies  to  be  canceled,  which  was  done ;  but  one  of 
the  directors  kept  the  present  policy  on  foot  by  the  payment 
of  the  premiums  till  the  duke's  death.  It  may  be  conceded  for 
the  purpose  of  the  present  argument  that  these  transactions 


372  1>"SL'RA_NCE  :    Fire,  Life,    Marine.  c.  n. 

between  Mr.  "Wright  and  the  otRce  totally  put  an  end  to  that 
interest  which  the  Anchor  Company  had  when  the  policy  was 
effected,  and  in  respect  of  which  it  was  effected,  and  that  at 
the  time  of  the  duke's  death  and  up  to  the  commencement  of 
the  suit  the  plaintiff  had  no  interest  whatever.  This  raises  the 
very  important  question,  whether,  under  these  circumstances, 
the  assurance  was  void,  and  nothing  could  be  recovereil  thereon. 
TVe  are  all  of  opinion  that  it  (the  interest  of  the  plaintiff  which 
had  terminated  before  the  duke's  death)  was  sufficient,  and 
but  for  the  case  of  Godsall  v.  Boldero,  9  East,  72,  should  have 
felt  no  doubt  upon  the  question.  The  contra^?t  commonly  called 
life  as&ia'iince,  ichen  j.rr<>j)erl i/  considered,  is  a  mere  contract  to 
pay  a  certain  sum  of  money  on  the  death  of  a  j}erson.  in  consid- 
eration of  the  due  payynent  of  a  certain  annuity  for  his  life,  the 
am.ount  of  the  annuity  heing  calculated  in  the  nrst  instance  ac- 
cording to  the  probable  duration  of  the  life  •  arid  when  once 
fixed  it  is  constant  a?id  invariable.  The  stipulated  amount  of 
annuity  is  to  be  uniformly  paid  on  one  side,  and  the  sum  to  be 
paid  in  the  event  of  death  is  always  (except  when  bonuses  have 
been  given  by  prosperous  offices)  the  same  on  the  other.  This 
species  of  insurance  in  no  loay  resembles  a  contract  of  indem- 
nity. Policies  of  assurance  against  fire  and  against  marine 
risks  are  both  properly  contracts  of  indemnity,  the  insurer 
eno-ag^ins:  to  make  s:ood,  within  certain  limited  amounts,  the 
losses  sustained  by  the  insured  in  their  buildings,  ships,  and 
effects.  Policies  on  maritime  risks  were  afterwards  used  im- 
properly, and  made  mere  wagers  on  the  happening  of  those 
perils.  This  practice  was  limited  by  the  19  G.  II.,  c.  37.  and  put 
an  end  to  in  all  except  a  few  cases ;  but  at  common  law.  before 
this  statute  with  respect  to  maritime  risks,  and  the  14  G.  III., 
3,  c.  4S.  as  to  insurances  on  lives,  it  is  perfectly  clear  that  aU  con- 
tracts for  wager  policies  and  wagei-s  which  were  not  contrary 
to  the  policy  of  the  law  were  legal  contracts  :  and  so  it  is  stated 
by  the  court  in  Cousiris  v.  yarites.  3  Taunt.  315,  to  have  been 
solemnly  determined  in  the  case  of  Lucena  v.  Craufurd,  2  Bos. 
(fe  P.  324.  2  N.  R.  269.  without  even  a  difference  of  opinion 
among  all  the  judges.  To  the  like  effect  was  the  decision  of 
the  court  of  error  in  Ireland,  before  all  the  judges  except  three, 
in  The  British  Insurance  Co.  v.  Mngee.  1  Cooke  (te  Ale.  1S2, 
that  the  assurance  was  legal  at  common  law.     Their  contract, 


o.  II.         Dalby  y.  India  &  London  Life  Assur.  Co.  273 

therefore,  in  this  case  to  pay  a  fixed  sum  of  XI, 000  on  the  death 
of  the  late  Duke  of  Cambridge,  would  have  been  unquestionably 
legal  at  common  law  if  the  plaintiff  had  had  an  interest  therein 
or  not ;  and  the  sole  question  is  whether  this  policy  was  ren- 
dered illegal  and  void  by  the  provisions  of  the  statute  14  Ct. 
j[ILj_c^_48^  This  depends  upon  its  true  construction.  The  statute 
recites  that  the  making  insurances  on  lives  and  other  events, 
wherein  the  Insured  shall  have  no  interest,  hath  introduced  a  mis- 
chievous kind  of  gaming,  and  for  the  remedy  thereof  it  enacts  (§1.) 
"  that  no  insurance  shall  he  made  by  any  one  on  the  life  or  lives\ 
of  any  person  or  persons,  or  on  any  other  events  whatsoever, 
wherein  the  person  or  persons  for  whose  use  and  benefit  or  on 
whose  account  such  policy  shall  be  made  shall  have  no  interest, 
or  by  way  of  gaming  and  wagering;  and  that  every  assurance 
made  contrary  to  the  true  intent  and  meaning  thereof,  shall  be  >- 
null  and  void,  to  all  intents  and  purposes  whatsoever."  As  the 
Anchor  Assurance  Company  had  unquestionably  an  interest  in 
the  continuance  of  the  life  of  the  Duke  of  Cambridge,  and  that 
to  the  amount  of  £1,000,  because  they  had  bound  themselves 
to  pay  a  sum  of  £1,000  to  Mr.  Wright  on  that  event,  the 
policy  effected  by  them  with  the  defendants  was  certainly 
legal  and  valid,  and  the  plaintiff,  without  the  slightest  doubt, 
could  have  recovered  the  full  amount  if  there  were  no  other 
provision  in  the  act.  The  contract  is  good  at  common  law,  and 
certainly  not  avoided  by  the  first  section  of  the  14  G,  TIL,  c.  48. 
This  section,  it  is  to  be  observed,  does  not  provide  for  any  par- 
ticular amount  of  interest.  According  to  it,  if  there  was  any 
interest,  however  small,  the  policy  would  not  be  avoided.  The 
question  arises  on  the  third  clause ;  it  is  as  follows :  "  And  be  it 
further  enacted,  that  in  all  cases  where  the  insured  hath  inter- 
est in  such  life  or  lives,  event  or  events,  no  greater  sum  shall 
be  recovered  or  received  from  the  insurer  or  insurers  than  the 
amount  or  value  of  the  interest  of  the  assured  in  such  life  or 
hves,  or  other  event  or  events."  Now,  what  is  the  meaning  of 
this  provision  ?  On  the  part  of  the  plaintiff  it  is  said  it  means 
only  that  in  all  cases  in  which  the  party  insuring  has  an  inter- 
est when  he  effects  the  policy,  his  right  to  recover  and  receive 
is  to  be  limited  to  that  amount ;  otherwise,  under  color  of  a 
small  interest,  a  wagering  policy  might  be  niade  to  a  large 
amount,  as  it  might  if  the  first  clause  stood  alone.  The  right  to 
18 


2Yir  Insurance  :    Fire,  Life,  Marine.  o.  i. 

recover,  therefore,  is  limited  to  the  amount  of  the  interest  at 
the  time  of  effecting  the  policy  ;  upon  that  value  the  assured 
must  have  the  amount  of  premium  calculated  ;  if  he  states  it 
truly,  no  difficulty  can  occur ;  he  pays,  in  the  annuity  for  life, 
the  fair  value  of  the  sum  payable  at  death.  If  he  misrepresents 
by  overrating  the  value  of  the  interest,  it  is  his  own  fault  in 
paying  more  in  the  way  of  annuity  than  he  ought,  and  he  can 
recover  only  the  true  value  of  the  interest  in  respect  of  which 
he  effected  the  policy,  but  that  value  he  can  recover.  Thus 
the  liability  of  the  assurer  becomes  constant  and  uniform,  to 
pay  an  unvarying  sum  on  the  death  of  the  cestui  que  vie,  in 
consideration  of  an  unvarying  and  uniform  premium  paid  by 
the  assured.  The  bargain  is  fixed  as  to  amount  on  both  sides. 
This  construction  is  effected  by  reading  the  word  "  hath  "  as 
referring  to  the  time  of  effecting  the  policy.  By  the  first  sec- 
tion the  assured  is  prohibited  from  effecting  an  insurance  on 
a  life,  or  on  an  event  wherein  he  "  shall  have  "  no  interest — 
that  is,  at  the  time  of  assuring;  and  then  the  third  section 
requires  that  he  shall  recover  only  the  interest  that  he  "  hath  ; " 
if  he  has  an  interest  when  the  policy  is  made,  he  is  not  wager- 
ing or  gaming,  and  the  prohibition  of  the  statute  does  not 
apply  to  his  case.  Had  the  third  section  provided  that  no  more 
than  the  amount  or  value  of  the  interest  should  be  insured,  a 
question  might  have  been  raised,  whether,  if  the  insurance  had 
been  for  a  larger  amount,  the  whole  would  not  have  been  void  ; 
but  the  prohibition  to  recover  or  receive  more  than  that  amount 
obviates  any  difficulty  on  that  head.  On  the  other  hand,  the 
defendants  contend  that  the  meaning  of  this  clause  is,  that  the 
assured  shall  recover  no  more  than  the  value  of  the  interest 
which  he  has  at  the  time  of  the  recovery,  or  receive  more  than 
its  value  at  the  time  of  the  receipt.  The  words  must  be  altered 
materially  to  limit  the  sum  to  be  recovered  to  the  value  at  the 
time  of  the  death,  or  if  payable  at  a  time  after  death,  when  the 
cause  of  action  accrues.  But  there  is  the  most  serious  objec- 
tion to  any  of  these  constructions.  It  is,  that  the  written  con- 
tract, which,  for  the  reasons  given  before,  is  not  a  wagering 
contract,  but  a  valid  one,  permitted  by  the  statute,  and  very 
clear  in  its  language,  is  by  this  mode  of  construction  com- 
pletely altered  in  its  terms  and  effect.  It  is  no  longer  a  con- 
tract  to  pay  a  certain   sum  as  the  value  of  a  then-existing 


0.  I.  Dalbt  v.  India  &  London  Life  Assuk.  Co.  275 

interest  in  the  event  of  death,  in  consideration  of  a  fixed 
annuity,  calculated  with  reference  to  that  sum,  but  a  con- 
tract to  pay,  contrary  to  its  express  words,  a  varying  sum, 
according  to  the  alteration  of  the  value  of  that  interest  at 
the  time  of  the  death  or  the  accrual  of  the  cause  of  action, 
or  the  time  of  the  verdict  or  execution,  and  yet  the  price 
or  the  premium  to  be  paid  is  fixed,  calculated  on  the  original 
fixed  value,  and  is  unvarying,  so  that  the  assured  is  obliged  to 
pay  a  certain  premium  every  year,  calculated  on  the  value  of 
his  interest  at  the  time  of  the  policy,  in  order  to  have  a  right 
to  recover  an  uncertain  sum,  namely,  that  which  happens  to  be 
the  value  of  the  interest  at  the  time  of  the  death  or  afterwards, 
or  at  the  time  of  the  verdict.  He  has  not,  therefore,  a  sura 
certain,  which  hB  stipulated  for  and  bought  with  a  certain 
annuity ;  but  it  may  be  a  much  less  sum,  or  even  none  at  all. 
This  seems  to  us  so  contrary  to  justice  and  fair  dealing,  and 
common  honesty,  that  this  construction  cannot,  we  think,  be 
put  upon  the  section.  We  should,  therefore,  have  no  hesitation, 
if  the  question  were  res  Integra^  in  putting  the  much  more 
reasonable  construction  on  the  statute,  that  if  there  is  an  inter- 
est at  the  time  of  the  policy  it  is  not  a  wagering  policy,  and 
that  the  true  value  of  that  interest  may  be  recovered,  in  exact 
conformity  with  the  words  of  the  contract  itself.  The  only 
effect  of  the  statute  is  to  make  the  assured  value  his  interest 
at  its  true  amount  when  he  makes  the  contract.  But  it  is 
said  that  the  case  of  Godsall  v.  Boldero^  9  East,  72,  has  con- 
cluded the  question.  Upon  considering  this  case,  it  is  certain 
that  Lord  Ellenborough  decided  it  upon  the  assumption  that  a 
life  policy  was  in  its  nature  a  contract  of  indemnity,  as  policies 
on  marine  risks  and  against  fire  undoubtedly  are  ;  and  that  the 
action  was,  in  point  of  law,  founded  on  the  supposed  damnifi- 
cation occasioned  by  the  death  of  the  debtor  existing  at  the 
time  of  the  action  brought,  and  his  lordship  relied  upon  the 
decision  of  Lord  Mansfield,  in  Hannilton  v.  Metides,  2  Burr. 
1270,  that  the  plaintiff's  demand  was  for  an  indemnity  only. 
Lord  Mansfield  was  speaking  of  a  policy  against  marine  risks, 
which  is  in  its  terms  a  contract  for  indemnity  only.  But  that 
is  not  the  nature  of  what  is  termed  an  assurance  for  life ;  it 
really  is  what  it  is  on  the  face  of  it,  a  contract  to  pay  a  certain 
sum  in  the  event  of  death;  it  is  valid  at  common  law,  and,  if 


2T6  Insdrancp::    Fire,  Life,  Marine.  o.  it. 

it  is  made  by  a  person  having  an  interest  in  the  duration  of  the 
life,  is  not  prohibited  by  the  statute  14  G.  Til,  c.  48. 

Judgment  reversed,  and  a  venire  de  novo. 


Supreme  Court  of  Judicature,  1881. 
RAYNER  V.  PRESTON. 

(L.  R.,  18  Ch.  D.  1.) 

Inturance  is  a  personal  contract,  and  does  not  run  with  the  title  of  ths  property 
insured. 

This  was  an  appeal  from  a  judgment  of  Jessel,  Master  of 
the  Rolls,  dismissing  the  action.  The  plaintiffs  purchased  from 
the  defendants  a  messuage  and  vYorkshops.  Between  the  date 
of  the  contract  and  the  time  fixed  for  completion,  the  buildings 
purchased  were  injured  by  fire.  The  vendors  had  before  the 
contract  insured  the  buildings  against  fire,  but  there  was  not 
in  the  contract  any  mention  of  this  fact  or  of  the  policy.  The 
plaintiffs  brought  an  action  to  establish  their  right  to  a  sum 
received  by  the  vendors  from  the  insurance  office,  or  to  have  it 
applied  in  or  towards  reinstating  the  buildings  injured.  The 
Master  of  the  Rolls  decided  against  their  claim,  and  from  this 
decision  the  plaintiffs  appealed. 

It  was  contended  by  the  appellants  that  they  were  entitled 
to  the  moneys  (1)  on  general  principles,  irrespective  of  any 
special  circumstances  alleged  to  exist  in  the  case  ;  (2)  under  the 
provisions  of  the  Act  14  Geo.  III.,  c.  Y8,  either  alone  or  with 
the  aid  of  the  special  circumstances  of  this  case. 

Brett,  L.  J. — For  a  reason  which  will  presently  appear 
(viz.,  the  different  opinion  of  Lord  Justice  James),  I  give  with 
some  fear  the  result  of  the  (I  must  say)  very  clear  opinion 
which  I  have  in  this  case. 

This  action  is  brought  by  the  plaintiffs  against  the  defend- 
ants to  recover  money  which  is  in  the  hands  of  the  defendants ; 
and,  therefore,  if  the  action  had  been  brought  at  common  law, 
it  would  have  been  an  action  for  money  had  and  received. 
That  action  was  always  treated  at  common  law  as  being 
founded  upon  equity,  and  therefore  it  seems  to  me  that  the 
decision  in  this  case,  whatever  it  ought  to  be,  would   be  the 


o.  n.  Rayner  v.  Preston.  277 

same  whether  it  should  be  considered  to  be  a  decision  at  com- 
mon law  or  in  equity. 

It  seems  to  me  that  the  question  raised  between  the  plain- 
tiffs-and  the  defendants  calls  upon  us  to  consider,  first  of  all, 
the  nature  of  a  policy  of  fire  insurance ;  and,  secondly,  what 
was  the  relation  with  regard  to  the  policy  and  to  the  property 
between  the  plaintiffs  and  the  defendants  in  this  case.  Now, 
in  my  judgment,  the  subject-matter  of  the  contract  of  insurance 
is  money,  and  money  only.  The  subject-matter  of  insurance  is 
a  different  thing  from  tlie  subject-matter  of  the  contract  of 
insurance.  The  subject-matter  of  insurance  may  be  a  house  or 
other  premises  in  a  fire  policy,  or  may  be  a  ship  or  goods  in  a 
marine  policy.  These  are  the  subject-matter  of  insurance,  but 
the  subject-matter  of  the  contract  is  money,  and  money  only. 
The  only  result  of  the  policy,  if  an  accident  which  is  within  the 
insurance  happens,  is  a  payment  of  money.  It  is  true  that, 
under  certain  circumstances,  in  a  fire  policy  there  may  be  an 
option  to  spend  the  money  in  rebuilding  the  premises ;  but  that 
does  not  alter  the  fact  that  the  onl}'  liability  of  the  insurance 
company  is  to  pay  money.  The  contract,  therefore,  is  a  con- 
tract with  regard  to  the  payment  of  money,  and  it  is  a  con- 
tract made  between  two  persons,  and  two  persons  only,  as  a 
contract. 

In  this  case  there  was  a  contract  of  insurance  made  between 
the  defendants  and  the  insurance  company.  That  contract 
was  made  by  the  defendants,  not  on  behalf  of  any  undisclosed 
principal,  not  on  behalf  of  any  one  interested  other  than  them- 
selves. The  contract  was  made  by  the  defendants  solely  and 
entirely  on  their  own  behalf,  and  at  a  time  when  they  had  no 
relation  of  any  kind  with  the  plaintiffs.  It  was  a  personal  con- 
tract between  the  defendants  and  the  insurance  office,  to  which 
they  were  the  sole  parties.  It  is  true  that  under  certain  cir- 
cumstances a  policy  of  insurance  may,  in  equity,  be  assigned 
so  as  to  give  another  person  a  right  to  sue  upon  it ;  but  in  this 
case  the  policy  of  insurance,  as  a  contract,  never  was  assigned 
by  the  defendants  to  the  plaintiffs.  It  would  have  been  assigned 
by  the  defendants  to  the  plaintiffs  if  it  had  been  included  in  the 
contract  of  purchase,  but  it  was  not.  Any  valuation  of  the 
policy,  any  consideration  of  increase  of  the  price  of  the  premises 
in  consequence  of  there  being  a  policy,  was  wholly  omitted. 


278  Insurance  :    Fire,  Life,  Marine.  o.  n. 

There  was  nothing  given  by  the  plaintiffs  to  the  defendants 
for  the  contract.  The  contract,  therefore,  neither  express! v 
nor  impliedly,  was  assigned  to  the  plaintiffs;  and,  so  far  as 
regards  the  contract  of  insurance,  there  never  was  any  relation 
of  any  kind  between  the  plaintiffs  and  the  defendants. 

But  there  did  exist  a  relation  between  the  plaintiffs  and  the 
defendants,  not  with  regard  to  the  subject-matter  of  the  con- 
tract, but  with  regard  to  the  subject-matter  of  the  insurance. 
There  was  a  contract  of  purchase  and  sale  between  the  plain- 
tiffs and  the  defendants  in  respect  of  the  premises  insured.  It 
becomes  necessary  to  consider  accurately,  as  it  seems  to  me, 
and  to  state  in  accurate  terms,  what  is  the  relation  between 
the  two  people  who  have  contracted  together  with  regard  to 
premises  in  a  contraot  of  sale  and  purchase.  With  the  greatest 
deference,  it  seems  wrong  to  say  that  the  one  is  a  trustee  for 
the  other.  The  contract  is  one  which  a  court  of  equity  will 
enforce  by  means  of  a  decree  for  specific  performance.  But  if 
the  vendor  were  a  trustee  of  the  property  for  the  vendee,  it 
would  seem  to  me  to  follow  that  all  the  product,  all  the  value 
of  the  property  received  by  the  vendor  from  the  time  of  the 
making  of  the  contract  ought,  under  all  circumstances,  to  be- 
long to  the  vendee.  What  is  the  relation  between  them,  and 
what  is  the  result  of  the  contract  ?  Whether  there  shall  ever 
be  a  conveyance  depends  on  two  conditions :  first  of  all, 
whether  the  title  is  made  out,  and,  secondly,  whether  the  money 
is  ready  ;  and  unless  those  two  things  coincide  at  the  time 
when  the  contract  ought  to  be  completed,  then  the  contract 
never  will  be  completed  and  the  property  never  will  be  con- 
veyed. But  suppose  at  the  time  when  the  contract  should  be 
completed,  the  title  should  be  made  out  and  the  money  is  ready, 
then  the  conveyance  takes  place.  Now  it  has  been  suggested 
that  when  that  takes  place,  or  when  a  court  of  equity  decrees 
specific  performance  of  the  contract,  and  the  conveyance  is 
made  in  pursuance  of  that  decree,  then  by  relation  back  the 
vendor  has  been  trustee  for  the  vendee  from  the  time  of  the 
making  of  the  contract.  But,  again,  with  deference,  it  appears 
to  me  that  if  that  were  so,  then  the  vendor  would  in  all  cases 
be  trustee  for  the  vendee  of  all  the  rents  which  have  accrued 
due  and  which  have  been  received  by  the  vendor  between  the 
time  of  the  making  of  the  contract  and  the  time  of  completion ; 


o.  II.  Rayner  v.  Preston.  279 

but  it  seems  to  rae  that  that  is  not  the  law.  Therefore,  I  ven- 
ture to  say  that  I  doubt  whether  it  is  a  true  description  of  the 
relation  between  the  parties  to  say  that  from  the  time  of  the 
making  of  the  contract,  or  at  any  time,  one  is  ever  trustee  for 
the  other.  They  are  only  parties  to  a  contract  of  sale  and  pur- 
chase of  which  a  court  of  equity  will  under  certain  circum- 
stances decree  a  specific  performance.  But  even  if  the  vendor 
was  a  trustee  for  the  vendee,  it  does  not  seem  tb  me  at  all  to 
follow  that  anything  under  the  contract  of  insurance  would 
pass.  As  I  have  said,  the  contract  of  insurance  is  a  mere  per- 
sonal contract  for  the  payment  of  money.  It  is  not  a  contract 
which  runs  with  the  land.  If  it  were,  there  ought  to  be  a- 
decree  that  upon  the  completion  of  the  purchase  the  policy  be 
handed  over.  But  that  is  not  the  law.  The  contract  of  insur- 
ance does  not  run  with  the  land  ;  it  is  a  mere  personal  contract, 
and  unless  it  is  assigned  no  suit  or  action  can  be  maintained 
upon  it  except  between  the  original  parties  to  it. 

I  therefore,  with  deference,  think  that  the  plaintiffs  here 
cannot  recover  from  the  defendants,  on  the  ground  that  there 
was  no  relation  of  any  kind  or  sort  between  the  plaintiffs  and 
the  defendants  with  regard  to  the  policy,  and  therefore  none 
with  regard  to  any  money  received  under  the  policy. 

James,  L.  J. — I  am  unable  to  concur  in  affirming  the  judg- 
ment of  the  Master  of  the  Rolls.  According  to  my  view  of  the 
case,  the  plaintiff's  contention  is  founded  not  only  on  what  I 
may  call  the  natural  equity  which  commends  itself  to  the  gen- 
eral sense  of  the  lay  world  not  instructed  in  legal  principles,  but 
also  on  artificial  equity  as  it  is  understood  and  administered  in 
our  system  of  jurisprudence. 

I  am  of  opinion  that  the  relation  between  the  parties  was 
truly  and  strictly  that  of  trustee  and  cestui  que  trust.  I  agree 
that  it  is  not  accurate  to  call  the  relation  between  the  vendor 
and  purchaser  of  an  estate  under  a  contract  while  the  contract 
is  in  fieri  the  relation  of  trustee  and  cestui  que  trust.  But  that 
is  because  it  is  uncertain  whether  the  contract  will  or  will  not 
be  performed,  and  the  character  in  which  the  parties  stand  to 
one  another  remains  in  suspense  as  long  as  the  contract  is  m 
fi^ri.  But  when  the  contract  is  performed  by  actual  convey- 
ance, or  performed  in  everything  but  the  mere  formal  act  of 


280  Insurance:   Fire,  Life,  Marine.  c.  n. 

sealing  the  engrossed  deeds,  then  that  completion  relates  back 
to  the  contract,  and  it  is  thereby  ascertained  that  the  relation 
was  throughout  that  of  trustee  and  cestui  que  trust.  That  is  to 
say,  it  is  ascertained  that  while  the  legal  estate  was  in  the 
vendor  the  beneficial  or  equitable  interest  was  wholly  in  the 
purchaser.  And  that,  in  my  opinion,  is  the  correct  definition 
of  a  trust  estate.  Wherever  that  state  of  things  occurs,  whether 
by  act  of  the  parties  or  by  act  or  operation  of  law,  whether  it  is 
ascertained  from  the  first  or  after  a  period  of  suspense  and  un- 
certainty, then  there  is  a  complete  and  perfect  trust,  the  legal 
owner  is,  and  has  been  a  trustee,  and  the  beneficial  owner  is, 
and  has  been  a  cestui  que  trust. 

This  being  the  relation  between  the  parties,  I  hold  it  to  be 
an  universal  rule  of  equity  that  any  right  which  is  vested  in  a 
trustee — any  benefit  which  accrues  to  a  trustee,  from  whatever 
source  or  under  whatever  circumstances,  by  reason  of  his  legal 
ownership  of  the  property — that  right  and  that  benefit  he  takes 
as  trustee  for  the  beneficial  owner.  If  the  policy  of  insurance 
in  this  case  were  a  collateral  contract,  such  as  the  policy  which 
a  creditor  effects  on  the  life  of  his  debtor,  the  case  would  be 
wholly  different.  But  the  policy  of  fire  insurance  is  not,  in  ray 
opinion,  a  collateral  contract,  it  is  not  a  wagering  contract,  a 
contract  that  if  a  fire  happens  then  a  certain  sura  of  money 
shall  be  paid  to  the  insurer  ;  it  is  in  terms  and  in  effect  a  con- 
tract that,  if  the  property  is  injured  then  the  insurance  company 
will  make  good  the  actual  damage  sustained  by  the  property. 
That  damage,  and  that  damage  only,  gives  the  right  and  is  the 
measure  of  the  right,  and  it  seems  to  me  impossible  to  say  that 
it  is  not  by  reason  of  the  legal  ownership,  and  in  respect  solely 
of  the  injury  done  to  that  legal  ownership,  that  the  right  to 
recover  from  the  insurance  company  accrued  to  the  insured. 
If  the  fire  in  this  case  had  happened  through  the  wrongful  or 
negligent  act  of  a  third  person  while  the  contract  was  in  fieri 
the  legal  right  to  sue  for  the  damage  would  be  in  the  vendor ; 
but  on  the  completion  of  the  contract  the  purchaser  would  be 
entitled  to  use  the  name  of  the  vendor  as  his  trustee  to  sue  for 
the  damage  so  sustained,  or,  if  the  damages  had  actually  been 
recovered  in  the  interval,  to  recover  the  damages  from  the 
vendor.  And  it  appears  to  me  that  there  is  no  distinction  in 
principle  between  this  right  and  the  right  to  use  the  vendor's 


0.  II.  Raynek  v.  Preston.  281 

name  in  an  action  on  the  contract  of  indemnity  against  loss  by 
fire  wliich  the  poHcy  of  insurance  is.  It  is  not,  in  my  view  of 
the  case,  at  all  material  to  consider  what  would  be  the  case  if 
after  actual  conveyance  and  during  the  currency  of  the  policy 
a  fire  had  occurred.  The  vendoi'  in  that  case  would  have  no 
right  as  between  him  and  the  insurance  office,  and  the  pur 
chaser  would  have  no  right  of  action,  because  one  of  the 
conditions  of  the  policy  excludes  it,  and,  independently  of  that 
condition,  the  policy  would,  or  might  probably  be  held  not  to 
run  with  the  land  in  the  hands  of  the  subsequent  owner,  and  in 
that  case  there  would  not  be  that  which  is  the  foundation  of  the 
right — legal  ownership  and  right  in  one  person,  and  equitable 
ownership  in  another. 

No  doubt  it  is  a  mere  accident  that  there  was  such  a 
policy,  and  there  was  such  a  right.  The  vendee  could  not 
have  complained  if  there  had  been  no  insurance.  But  that  has 
occurred  in  a  great  variety  of  cases  in  which  equitable  rights 
have  arisen.  Where  there  is  a  creditor,  a  debtor,  and  a  surety, 
and  the  surety  finds  out  that  by  something  to  which  he  was  not 
privy,  and  of  which  he  had  never  heard,  somebody  else  had 
become  surety,  or  the  creditor  had  obtained  security,  the 
surety  has  a  right  to  obtain  contribution  from  such  surety,  or 
to  obtain  such  security  as  the  case  may  be,  and  the  creditor 
releasing  such  surety  or  parting  with  such  security  would 
probably  find  himself  in  considerable  peril. 

In  the  same  city  in  which  this  controversy  has  arisen  there 
occurred,  some  years  ago,  a  great  destruction  of  property  by 
reason  of  an  explosion  of  gunpowder,  caused  by  a  fire.  Houses 
were  damaged,  not  by  fire,  but  by  the  explosion  caused  by  a  fire 
in  another  neighboring  place.  The  insurance  offices  thought 
that  it  was  for  their  interest  to  be  very  liberal,  and  treat  the  dam- 
age from  the  explosion  as  a  damage  by  fire  within  the  policies, 
and  to  pay  accordingly.  This  was  a  mere  act  of  liberality. 
They  thought  it  was  for  their  permanent  benefit  commercially 
to  be  liberal,  and  they  were  liberal  accordingly.  See  Taunton 
V.  Royal  Insurance  Company,  2  H.  &  M.  135.  I  cannot  my- 
self doubt,  that  if  a  trustee,  or  a  vendor  who  had  become  trustee 
by  the  completion  of  his  contract,  had  received  this  bounty,  he 
would  have  received  it  by  reason  of  his  trusteeship,  and  would 
have  had  to  give  it  up  to  his  cestui  que  trust  or  purchaser. 


282  Insurance  :   Fire,  Life,  Marine.  o.  ii. 

Brett,  L.  J. — I  should  like  to  add  to  what  I  have  said, 
that  I  feel  very  great  doubt  whether,  as  between  the  defend- 
ants and  the  insurance  company,  the  defendants  can  keep  the 
moneys. 

In  the  Court  of  Appeal,  1883. 

CASTELLAIN  v.   PRESTON. 

(L.  R,,  11  Q.  B.  D.  380.) 
Th»  Doctrine  of  Subrogation  as  Related  to  Indemniijf. 

Appeal  of  the  plaintiff  from  the  judgment  of  Chitty,  J.,  in 
favor  of  the  defendants. 

The  plaintiff  sued  on  behalf  of  the  Liverpool  and  London 
and  Globe  Insurance  Company,  to  recover  a  sum,  £330  with 
interest  since  the  25th  of  September,  1878.  On  the  25th  of 
March,  1878,  the  defendants,  as  owners  of  certain  lands  and 
buildings  in  Liverpool,  effected  an  insurance  on  the  buildings 
against  loss  by  fire,  and  they  kept  the  policy  on  foot  by  pay- 
ment of  the  premiums  until  after  the  fire  hereinafter  men- 
tioned occurred.  The  policy  was  in  the  usual  form,  giving  the 
insurers  the  option  of  reinstating  the  property.  On  the  31st 
of  July,  1878,  the  defendants  contracted  to  sell  the  land  and 
the  buildings  to  their  tenants,  Messrs.  Rayner,  for  the  sum  of 
£8,100,  and  they  received  a  deposit.  The  contract  provided 
that  the  time  of  the  completion  should  be  such  day  within  two 
years  from  the  date  as  the  vendors  should  name. 

On  the  15th  of  August  in  the  same  year,  a  fire  occurred, 
damaging  part  of  the  buildings.  A  claim  was  made  on  behalf 
of  the  defendants,  and  after  negotiation  as  to  the  sum  to  be 
paid,  the  amount  of  the  claim  was  ultimately  fixed  at  £330, 
and  that  sum  was  in  fact  paid  on  the  25th  of  September,  1878, 
by  the  insurers,  who  were  at  that  time  ignorant  of  the  exist- 
ence of  the  contract  for  sale.  On  the  25th  of  March,  1879,  the 
defendants  named  the  5th  of  May  as  the  day  of  completion, 
and  on  the  following  12th  of  December  the  conveyance  was 
executed  and  the  balance  of  the  purchase  money  paid. 

Brett,  L.  J. — In  this  case  the  action  is  brought  by  the 
plaintiff  as  representing  an  insurance  company  against  the 
defendants,  in  respect  of  money  which  has  been  paid  by  that 


0.  11.  Castellain  v.  Prkston.  283 

company  to  the  defendants  on  account  of  the  loss  by  fire  of  a 
building.  Tlio  defendants  were  the  owners  of  property  con- 
sisting partly,  at  all  events,  of  a  house,  and  the  defendants  had 
made  a  contract  of  sale  of  that  property  with  third  persons, 
which  contract,  upon  tiio  giving  of  a  certain  notice  as  to  the 
time  of  payment,  would  oblige  those  third  persons,  if  they  ful- 
filled the  contract,  to  pay  the  agreed  price  for  the  sale  of  that 
property,  a  part  of  which  was  a  house,  and  according  to  the 
peculiarity  of  such  a  sale  and  purchase  of  land  or  real  property 
the  vendees  would  have  to  pay  the  purchase  money,  whether 
the  house  was,  before  the  date  of  payment,  burnt  down  or  not. 
After  the  contract  was  made  with  the  third  persons,  and  be- 
fore the  day  of  payment,  the  house  was  burnt  down.  The 
vendors,  the  defendants,  having  insured  the  house  in  the  ordi- 
nary form  with  the  plaintiff's  company,  it  is  not  suggested 
that,  upon  the  house  being  burnt  down,  the  defendants  had 
not  an  insurable  interest.  They  had  an  insurable  interest,  as  it 
seems  to  me ;  first,  because  they  were  at  all  events  the  legal 
owners  of  the  property  ;  and,  secondly,  because  the  vendees  or 
third  persons  might  not  carry  out  the  contract,  and  if  for  any 
reason  they  should  never  carry  out  the  contract,  then  the  vend- 
ors, if  the  house  was  burnt  down,  would  suffer  the  loss.  Upon 
the  happening  of  the  fire  the  defendants  made  a  claim  on  the 
insurance  company  represented  by  the  plaintiff,  and  were  paid 
a  certain  sum  which  represented  the  damage  done  to  the 
house.  After  that,  the  contract  of  sale  between  the  defendants 
and  the  third  persons,  the  vendees  of  the  property,  was  carried 
out,  and  the  full  amount  of  the  purchase-money  was  paid  by 
the  third  persons  to  the  defendants  notwithstanding  the  fire. 
Under  those  circumstances,  the  plaintiff  representing  the  insur- 
ance company  brings  this  action  ;  I  do  not  say  that  he  brings 
it  to  recover  back  the  money  which  has  been  paid  by  the  insur- 
ance company  (for  that  expression  of  opinion  would  rather  in- 
terfere with  the  form  of  the  action),  but  he  brings  the  action  in 
respect  of  that  money. 

The  question  is  whether  this  action  is  maintainable.  The 
case  was  tried  before  Chitty,  J.,  and  he  in  a  very  careful  and 
elaborate  judgment  (8  Q.  B.  D.  613)  has  come  to  the  conclu- 
sion that  the  insurance  company  cannot  recover  against  the 
defendants  in  respect  of  the  money  paid  by  them.     It  seems  to 


284  Insurance  :    Fire,  Life,  Marine.  o.  n 

me  tliat  tlie  foundation  of  his  judgment  is  this,  that  he  con- 
siders that  the  <h>ctrino  of  subrogation  of  the  insurer  into  the 
position  of  the  assured  is  confined  within  Hmits  which  prevent 
it  from  extending  to  the  present  case.  I  must  now  consider 
whether  I  can  agree  with  him. 

In  order  to  give  my  opinion  upon  this  case,  I  feel  obliged 
to  revert  to  the  very  foundation  of  every  rule  which  has  been 
promulgated  and  acted  on  by  the  courts  with  regard  to  insur- 
ance law.  The  very  foundation,  in  my  opinion,  of  every  rule 
which  has  been  applied  to  insurance  law  is  this ;  namely,  that 
the  contract  of  insurance  contained  in  a  marine  or  fire  policy 
is  a  contract  of  indemnity,  and  of  indemnity  only,  and  that 
this  contract  means  that  the  assured,  in  case  of  a  loss  against 
which  the  policy  has  been  made,  shall  be  fully  indemnified,  but 
shall  never  be  more  than  fully  indemnified.  That  is  the  funda- 
mental principle  of  insurance;  and  if  ever  a  proposition  is 
brought  forward  which  is  at  variance  with  it — that  is  to  say, 
which  either  will  prevent  the  assured  from  obtaining  a  full 
indemnity,  or  which  will  give  to  the  assured  more  than  a 
full  indemnity — that  proposition  must  certainly  be  wrong. 

In  the  course  of  this  discussion  many  propositions  and  rules 
well  known  in  insurance  law  have  been  glanced  at.  For 
instance,  to  speak  of  marine  insurance,  the  doctrine  of  a  con- 
structive total  loss  originated  solely  to  carry  out  the  funda- 
mental rule  which  I  have  mentioned.  It  was  a  doctrine  intro- 
duced for  the  benefit  of  the  assured ;  for,  as  a  matter  of 
business,  a  constructive  total  loss  is  equivalent  to  an  actual 
total  loss;  and  if  a  constructive  total  loss  could  not  be  treated 
as  an  actual  total  loss,  the  assured  would  not  recover  a  full 
indemnity.  But  grafted  upon  the  doctrine  of  constructive 
total  loss  came  the  doctrine  of  abandonment,  which  is  a  doc- 
trine in  favor  of  the  insurer  or  underwriter,  in  order  that  the 
assured  may  not  recover  more  than  a  full  indemnity.  The 
doctrine  of  constructive  total  loss,  and  the  doctrine  of  notice  of 
abandonment  ingrafted  upon  it,  were  invented  or  promulgated 
for  the  purpose  of  making  a  policy  of  marine  insurance  a  con- 
tract of  indemnity  in  the  fullest  sense  of  the  term.  I  may 
point  out  that  the  doctrine  of  notice  of  abandonment  is  most 
difficult  to  justify  upon  principle;  it  was  introduced  rather  ass 
a  matter  of   justice  in  favor  of   the   underwriters,  so   as  to 


a  II.  Castkllain  v.  Preston.  285 

prevent  the  assured  from  obtaining  by  fraud  more  than  a  full 
indemnity.  That  doctrine  is  to  a  certain  extent  technical; 
that  is  to  say,  although  the  assured  has  in  reality  suffered  a 
constructive  total  loss,  and  although  he  is  upon  general  princi- 
ples entitled  to  recover,  nevertheless  he  must  fail  unless  he  has 
given  a  notice  of  abandonment.  I  suppose  that  the  doctrine 
of  notice  of  abandonment  was  originally  introduced  by  mer- 
chants and  underwriters,  and  afterwards  adopted  as  part  of 
the  law  as  to  marine  insurance  ;  but  at  first  sight  it  seems  a 
mere  encroachment  of  the  judges. 

I  have  mentioned  the  doctrine  of  notice  of  abandonment 
for  the  purpose  of  coming  to  the  doctrine  of  subrogation. 
That  doctrine  does  not  arise  upon  any  of  the  terms  of  the 
contract  of  insurance ;  it  is  only  another  proposition  which  has 
been  adopted  for  the  purpose  of  carrying  out  the  fundamental 
rule  which  I  have  mentioned,  and  it  is  a  doctrine  in  favor  of 
the  underwriters  or  insurers,  in  order  to  prevent  the  assured 
from  recovering  more  than  a  full  indemnity ;  it  has  been 
adopted  solely  for  that  reason.  It  is  not,  to  my  mind,  a 
doctrine  applied  to  insurance  law  on  the  ground  that  under- 
writers are  sureties.  Underwriters  are  not  always  sureties. 
They  have  rights  which  sometimes  are  similar  to  the  rights  of 
sureties,  but  that  again  is  in  order  to  prevent  the  assured  from 
recovering  from  them  more  than  a  full  indemnity.  But  it 
being  admitted  that  the  doctrine  of  subrogation  is  to  be  applied 
merely  for  the  purpose  of  preventing  the  assured  from  obtain- 
ing more  than  a  full  indemnity,  the  question  is,  whether  that 
doctrine  as  applied  in  insurance  law  can  be  in  any  way  limited. 
Is  it  to  be  limited  to  this,  that  the  underwriter  is  subrogated 
into  the  place  of  the  assured  so  far  as  to  enable  the  underwriter 
to  enforce  a  contract,  or  to  enforce  a  right  of  action  ?  Why  is 
it  to  be  limited  to  that,  if  when  it  is  limited  to  that,  it  will  in 
certain  cases  enable  the  assured  to  recover  more  than  a  full 
indemnity  ?  The  moment  it  can  be  shown  that  such  a  limita- 
tion of  the  doctrine  would  have  that  effect,  then,  as  I  said 
before,  in  my  opinion,  it  is  contrary  to  the  foundation  of  the 
law  as  to  insurance,  and  must  be  wrong.  And,  with  the 
greatest  deference  to  ray  brother  Chitty,  it  seems  to  me  that 
that  is  the  fault  of  his  judgment.  He  has  by  his  judgment 
limited  this  doctrine  of  subrogation  to  placing  the  insurer  in 


Insurance:    Fiue,  Life,  Marine.  o.  n. 

the  position  of  the  assured  only  for  the  purpose  of  enforcing 
a  right  of  action,  to  which  the  assured  may  be  entitled.  In 
order  to  apply  the  doctrine  of  subrogation,  it  seems  to  rae  that 
the  full  and  absolute  meaning  of  the  word  must  be  used,  that 
is  to  say,  the  insurer  must  be  placed  in  the  position  of  the 
assured.  Now  it  seems  to  me  that  in  order  to  carry  out  the 
fundamental  rule  of  insurance  law,  this  doctrine  of  subrogation 
must  be  carried  to  the  extent  which  I  am  now  about  to  en- 
deavor to  express,  namely,  that  as  between  the  underwriter  and 
the  assured  the  underwriter  is  entitled  to  the  advantage  of  every 
right  of  the  assured,  whether  such  right  consists  in  contract, 
fulfilled  or  unfulfilled,  or  in  remedy  for  tort  capable  of  being 
insisted  on  or  already  insisted  on,  or  in  any  other  right,  whether 
by  way  of  condition  or  otherwise,  legal  or  equitable,  which  can 
be  or  has  been  exercised  or  has  accrued,  and  whether  such 
right  could  or  could  not  be  enforced  by  the  insurer  in  the  name 
of  the  assured,  by  the  exercise  or  acquiring  of  which  right  or 
condition  the  loss  against  which  the  assured  is  insured,  can  be 
or  has  been  diminished.  That  seems  to  me  to  put  this  doctrine 
of  subrogation  in  the  largest  possible  form,  and  if  in  that  form, 
large  as  it  is,  it  is  short  of  fulfilling  that  which  is  the  funda- 
mental condition,  I  must  have  omitted  to  state  something  which 
ought  to  have  been  stated.  But  it  will  be  observed  that  I  use 
the  words  "  of  every  right  of  the  assured."  I  think  that  the 
rule  does  require  that  limit.  In  Burnand  v.  Rodocanochi,  7 
App.  Cas.  333,  the  foundation  of  the  judgment  to  my  mind 
was,  that  what  was  paid  by  the  United  States  Government 
could  not  be  considered  as  salvage,  but  must  be  deemed  to  have 
been  only  a  gift.  It  was  only  a  gift  to  which  the  assured  had 
no  right  at  any  time  until  it  was  placed  in  their  hands.  I  am 
aware  that  with  regard  to  the  case  of  reprisals,  or  that  which 
a  person  whose  vessel  has  been  captured  got  from  the  English 
Government  by  way  of  reprisal,  the  sum  received  has  been 
stated  to  be,  and  perhaps  in  one  sense  was,  a  gift  of  his  own 
Government  to  himself,  but  it  was  always  deemed  to  be  capable 
of  being  brought  within  the  range  of  the  law  as  to  insurance, 
because  the  English  Government  invariably  made  the  "  gift," 
so  invariably  that  as  a  matter  of  business  it  had  come  to  be 
considered  as  a  matter  of  right.  This  enlargement,  or  this 
explanation,  of  what  I  consider  to  be  the  real  meaning  of  the 


o.  n.  Castellain  v.  Preston.  987 

doctrine  of  subrogation,  siiows  that  in  iiiy  opinion  it  goes  much 
further  than  a  mere  transfer  of  those  rights  which  may  at  any 
time  give  a  cause  of  action  either  in  contract  or  in  tort,  because 
if  upon  the  happening  of  the  loss  there  is  a  contract  between  the 
assured  and  a  third  person,  and  if  that  contract  is  immediately 
fulfilled  by  the  third  person,  then  there  is  no  right  of  action  of 
any  kind  into  which  the  insurer  can  be  subrogated.  The  right 
of  action  is  gone  ;  the  contract  is  fulfilled.  In  like  manner,  if 
upon  the  happening  of  a  tort  the  tort  is  immediately  made 
good  by  the  tort  feasor,  then  the  right  of  action  is  gone ;  there 
is  no  right  of  action  existing  into  which  the  insurer  can  be  sub- 
rogated. It  will  be  said  that  there  did  for  a  moment  exist  a 
right  of  action  in  favor  of  the  assured,  into  which  the  insurer 
could  have  been  subrogated.  But  he  cannot  be  subrogated 
into  a  right  of  action  until  he  has  paid  the  sum  insured  and 
made  good  the  loss.  Therefore  innumerable  cases  would  be 
taken  out  of  the  doctrine,  if  it  were  to  be  confined  to  existing 
rights  of  action.  And  I  go  further  and  hold  that  if  a  right  of 
action  in  the  assured  has  been  satisfied,  and  the  loss  has  been 
thereby  diminished,  then,  although  there  never  was  nor  could 
be  any  right  of  action  into  which  the  insurer  could  be  sub 
rogated,  it  would  be  contrary  to  the  doctrine  of  subrogation  to 
say  that  the  loss  is  not  to  be  diminished  as  between  the  assured 
and  the  insurer  by  reason  of  the  satisfaction  of  that  right.  I 
fail  to  see  at  present,  if  the  present  defendants  would  have  had 
a  right  of  action  at  any  time  against  the  purchasers,  upon  which 
they  could  enforce  a  contract  of  sale  of  their  property  whether 
the  building  was  standing  or  not,  why  the  insurance  company 
should  not  have  been  subrogated  into  that  right  of  action.  But 
I  am  not  prepared  to  say  that  they  could  be,  more  particularly 
as  I  understand  my  learned  brother,  who  knows  much  more  of 
the  law  as  to  specific  performance  than  I  do,  is  at  all  events 
not  satisfied  that  they  could.  I  pass  by  the  question  without 
solving  it,  because  there  was  a  right  in  tlie  defendants  to  have 
the  contract  of  sale  fulfilled  by  the  purchasers  notwithstanding 
the  loss,  and  it  was  fulfilled.  The  assured  have  had  the  ad- 
vantage, therefore,  of  that  right ;  and  by  that  right,  not  by  a 
gift  which  the  purchasers  could  have  declined  to  make,  the 
assured  have  recovered,  notwithstanding  the  loss,  from  the 
purchasers,  the  very  sum  of  money  which  they  were  to  obtain 


•^SS  Insuranck  :   >  ire,  Life,   Marine.  o.  n. 

whether  this  building  was  burnt  or  not.  In  that  sense  I  can- 
not conceive  that  a  right,  by  virtue  of  which  the  assured  has 
his  loss  diminished,  is  not  a  right  which,  as  has  been  said, 
affects  the  loss.  This  right,  which  was  at  one  time  merely  in 
contract,  but  which  was  afterwards  fulfilled,  either  when  it 
was  in  contract  only,  or  after  it  was  fulfilled,  does  affect  the 
loss ;  that  is  to  say,  it  affects  the  loss  by  enabling  the  assured, 
the  vendors,  to  get  the  same  money  which  they  would  have 
got  if  the  loss  had  not  happened. 

While  I  am  applying  the  doctrine  of  subrogation  which  I 
have  endeavored  to  enunciate,  I  think  it  due  to  Chitty,  J.,  to 
point  out  what  passages  in  his  judgment  require  some  modifica- 
tion. I  find  him  reading  this  passage:  "I  know  no  founda- 
tion for  the  right  of  underwriters,  except  the  well-known  prin- 
ciple of  law,  that  where  one  person  has  agreed  to  indemnify 
another,  he  will,  on  making  good  the  indemnity,  be  entitled  to 
succeed  to  all  the  ways  and  means  by  which  the  person  indem- 
nified might  have  protected  himself  against  or  reimbursed  him- 
self for  the  loss."  That  is  a  quotation  from  Lord  Cairns,  in 
Simpson  v.  Thomson,  3  App.  Cas.  284.  The  learned  judge 
then  goes  on:  "What  is  the  principle  of  subrogation?  On 
payment  the  insurers  are  entitled  to  enforce  all  the  remedies, 
whether  in  contract  or  in  tort,  which  the  insured  has  against 
third  parties,  whereby  the  insured  can  compel  such  third  parties 
to  make  good  the  loss  insured  against."  That  is,  as  it  seems  to 
me,  to  confine  this  doctrine  of  subrogation  to  the  principle  that 
the  insurers  are  entitled  to  enforce  all  remedies,  whether  in  con- 
tract or  in  tort.  I  should  venture  to  add  this  :  "And  if  the  as- 
sured enforces  or  receives  the  advantage  of  such  remedies,  the 
insurers  are  entitled  to  receive  from  the  assured  the  advantage 
of  such  remedies."  Then,  when  we  come  to  this  illustration, 
"  Where  the  landlord  insures,  and  he  has  a  covenant  by  the  ten- 
ant to  repair,  the  insurance  office,  on  payment  in  like  manner, 
succeeds  to  the  right  of  the  landlord  against  his  tenant ; "  1 
would  add  this  :  "And  if  the  tenant  does  repair,  the  insurer  has 
the  right  to  receive  from  the  assured  a  benefit  equivalent  to 
the  benefit  which  the  assured  has  received  from  such  repair." 
Then,  dealing  with  the  case  of  Burnand  v.  Rodocanochi,  7 
App.  Cas.  333,  the  learned  judge  cites  the  opinion  of  Bramwell, 
L.  J.     He  says  that  Bramwell,  L.  J..  \k  '?'s  judgment  held  that 


o.  II.  Castellain  v.  Preston.  289 

it  was  not  salvage,  but  "  that  in  the  circumstances  the  sum  re- 
ceived by  the  shi})-o\vn(n'  was  but  a  pure  gift,  and  there  was  no 
right  on  the  part  of  the  insurers  to  recover  any  part  of  it  over 
against  him."  I,  for  myself,  venture  to  add  this  as  the  reason : 
"Because  there  was  no  right  in  the  assured  to  demand  the 
compensation  from  the  American  Government."  There  was 
no  right  to  demand  it;  it  was  bestowed  and  received  as  a  pure 
gift.  Darrell  v.  Tihhltts,  5  Q.  B.  D.  560,  seems  to  me  to  be 
entirely  in  favor  of  the  plaintiff  in  *this  case.  I  shall  not 
retract  from  the  very  terms  which  I  used  in  that  case.  It 
seems  to  me  that  in  Darrell  v.  Tibhitts  the  insurers  were  not 
subrogated  to  a  right  of  action,  or  to  a  remedy.  They  were 
not  subrogated  to  a  right  to  enforce  the  remedy,  but  what 
the}'  were  subrogated  into  was  the  right  to  receive  the  advan- 
tage of  the  remedy  which  had  been  applied,  whether  it  had 
been  enforced,  or  voluntarily  administered  by  the  person  who 
was  bound  to  administer  it.  That  seems  to  me  to  be  the 
doctrine.  Then  with  regard  to  the  passage  :  "  The  doctrine  is 
well  established  that  where  something  is  insured  against  loss, 
either  in  a  marine  or  a  fire  policy,  after  the  assured  has  been 
paid  by  the  insurers  for  the  loss,  the  insurers  are  put  into  the 
place  of  the  assured  with  regard  to  every  right  given  to  him 
by  the  law  respecting  the  subject-matter  insured,"  I  wish  to 
explain  that  that  was  a  distinct  clause,  and  it  was  so  intended 
by  me  when  I  stated  it.  I  then  mentioned  contracts  :  "  And 
with  regard  to  every  contract  which  touches  the  subject- 
matter  insured,  and  which  contract  is  affected  by  the  loss  or 
the  safety  of  the  subject-matter  insured  by  reason  of  the  peril 
insured  against." 

I  fail  to  conceive  any  contract  which  gives  a  right  over  the 
thing  insured,  which  is  not  affected  by  the  loss  or  safety  of  it, 
and  if  it  is  necessary  to  bring  the  present  case  within  those 
terms,  it  seems  to  me  that  the  contract  of  purchase  and  sale 
was  affected  by  that  loss.  I  will  not  go  further  with  the 
judgment  of  Chitty,  J.,  except  to  say  this,  that  at  the  end 
my  learned  brother  has  put  it  thus,  that  "  the  only  principle 
applicable  is  that  of  subrogation  as  understood  in  the  full  sense 
of  that  term."  There  I  agree  with  him,  only  my  view  of  the  full 
sense  is  larger  than  that  which  he  adopted.  "And  that  where 
the  right  claimed  is  under  a  contract  between  the  insured  and 

19 


290  Insurance:    Fire,   Life,  Marine.  o.  ii. 

third  parties,  it  must  be  confined  to  tlie  case  of  a  contract 
relating  to  the  subject-matter  of  the  insurance,  which  entitled 
the  insurers  to  have  the  damages  made  good."  I  think  it 
would  be  better  expressed  in  this  way :  "  Which  entitles  the 
assured  to  be  put  by  such  third  parties  into  as  good  a  position 
as  if  the  damage  insured  against  had  not  happened."  If  it  is 
put  in  that  sense,  it  seems  to  me  to  be  consistent  with  the  prop- 
osition which  I  laid  down  at  the  beginning  of  what  I  have 
said,  and  to  cover  this  case.  I  will  repeat  it :  "  Which  entitles 
the  assured  to  be  put  by  such  third  parties  into  as  good  a  posi- 
tion as  if  the  damage  insured  against  had  not  happened." 
The  contract  in  the  present  case,  as  it  seems  to  me,  does 
enable  the  assured  to  be  put  by  the  third  party  into  as  good  a 
position  as  if  the  fire  had  not  happened,  and  that  result  arises 
from  this  contract  alone.  Therefore,  according  to  the  true 
principles  of  insurance  law,  and  in  order  to  carry  out  the 
fundamental  doctrine,  namely,  that  the  assured  can  recover  a 
full  indemnity,  but  shall  never  recover  more,  except,  perhaps, 
in  the  case  of  the  suing  and  laboring  clause  under  certain  circum- 
stances, it  is  necessary  that  the  plaintiff  in  this  case  should  suc- 
ceed. The  case  of  Darrell  v.  Tibhitts,  5  Q.  B.  D.  560,  has  cut 
away  every  technicality  which  would  prevent  a  sound  decision. 
The  doctrine  of  subrogation  must  be  carried  out  to  the  full 
extent,  and  carried  out  in  this  case  by  enabling  the  plaintiff  to 
recover. 

Cotton,  L.  J. — In  this  case  the  appellant's  company  in- 
sured a  house  belonging  to  the  defendants,  and  before  there 
was  any  loss  by  fire  the  defendants  sold  the  house  to  certain 
purchasers.  Afterwards  there  was  a  fire,  and  an  agreed  sum 
was  paid  by  the  insurance  office  to  the  defendants  in  respect 
to  the  loss.  The  appellant  apparently  seeks  to  recover  the 
sum  which  the  office  paid  to  the  defendants,  and  if  the  plain- 
tiff's claim  could  be  shaped  only  in  this  form,  I  think  my 
opinion  would  be  against  him.  The  plaintiff's  claim  may  be 
treated  in  substance  in  another  way  ;  namely,  the  company 
seek  to  obtain  the  benefit,  either  wholly  or  partly,  of  the  amount 
paid  by  them  out  of  the  purchase  money  which  the  defendants 
have  received  since  the  fire  from  the  purchasers.  In  my  opin- 
ion, the  plaintiff  is  right  in  that  contention.     I  think  that  the 


o.  11.  Castellain  v.  Preston.  291 

question  turns  on  the  consideration  of  what  a  policy  of  insur- 
ance against  fire  is,  and  on  that  the  right  of  the  plaintiff  de- 
pends. The  pohcy  is  really  a  contract  to  indemnify  the  person 
insured  for  the  loss  which  he  has  sustained  in  consequence  of 
the  peril  insured  against,  which  has  happened,  and  from  that  it 
follows,  of  course,  that  as  it  is  only  a  contract  of  indemnity,  it 
is  only  to  pay  that  loss  which  the  assured  may  have  sustained 
by  reason  of  the  fire  which  has  occurred.  In  order  to  ascer- 
tain what  that  loss  is,  everj^thing  must  be  taken  into  account 
which  is  received  by  and  comes  to  the  hand  of  the  assured,  and 
which  diminishes  that  loss.  It  is  only  the  amount  of  the  loss, 
when  it  is  considered  as  a  contract  of  indemnity,  which  is  to  be 
paid  after  taking  into  account  and  estimating  those  benefits  or 
sums  of  money  which  the  assured  may  have  received  in  dimi- 
nution of  the  loss.  If  the  proposition  is  stated  in  that  manner 
it  is  clear  that  the  office  would  be  entitled  to  the  benefit  of 
anything  received  by  the  assured  before  the  time  when  the 
policy  is  paid,  and  it  is  established  by  the  case  of  Darrell  v. 
Tibhitts,  5  Q.  B.  D.  560,  that  the  insurance  company  is  entitled 
to  that  benefit,  whether  or  not  before  they  pay  the  money  they 
insist  upon  a  calculation  being  made  of  what  can  be  recovered 
in  diminution  of  the  loss  by  the  assured  ;  if  they  do  not  insist 
upon  that  calculation  being  made,  and  if  it  afterwards  turns 
out  that  in  consequence  of  something  which  ought  to  have 
been  taken  into  account  in  estimating  the  loss,  a  sum  of  money, 
or  even  a  benefit,  not  being  a  sum  of  money,  is  received,  then 
the  office,  notwithstanding  the  payment  made,  is  entitled  to 
say  that  the  assured  is  to  hold  that  for  its  benefit,  and  although 
it  was  not  taken  into  account  in  ascertaining  the  sum  which 
was  paid,  yet  when  it  has  been  received  it  must  be  brought  into 
account,  and  if  it  is  not  a  sum  of  money,  but  a  benefit  that  has 
been  received,  its  value  must  be  estimated  in  money.  Now  Lord 
Blackburn,  in  the  case  of  Burnand  v.  Rodocanochi.,  7  App. 
Cas.  339,  states  the  principle  in  these  words  :  "  The  general 
rule  of  law  (and  it  is  obvious  justice)  is  that  where  there  is  a 
contract  of  indemnity  (it  matters  not  whether  it  is  a  marine 
policy  or  a  policy  against  fire  on  land,  or  any  other  contract  of 
indemnity),  and  a  loss  happens,  anything  which  reduces  or 
diminishes  that  loss  reduces  or  diminishes  the  amount  which  the 
indemnifier  is  bound  to  pay  ;  and  if  the  indemnifier  has  already 


292  Insurance  :   Fire,  Life,  Marine.  o.  it. 

paid  it,  then  if  anything  which  diminishes  the  loss  comes  into 
the  hands  of  the  person  to  whom  he  has  paid  it,  it  becomes  an 
equity  that  the  person  who  has  already  paid  the  full  indemnity 
is  entitled  to  be  recouped  by  having  that  amount  back."  In 
Darrell  v.  Tibhiits,  to  which  I  have  already  referred,  the  ques- 
tion which  we  had  to  consider  v/as  whether  the  insurance  office 
was  entitled  to  the  benefit  produced  in  consequence  of  a  cove- 
nant to  repair  if  the  building  should  be  damaged  by  an  explosion 
of  gas.  In  ray  opinion  it  was  not  intended  in  any  way  to  limit 
the  right  of  the  insurer,  as  an  insurer,  to  cases  where  the  con- 
tract in  respect  of  which  benefit  had  been  received  related  to 
the  same  loss  or  damage  as  that  against  which  the  contract  of 
indemnity  was  created  by  the  policy.  That  was  what  was  before 
this  court  in  that  case,  and  undoubtedly  expressions  do  occur 
as  to  a  contract  relating  to  the  loss  or  affecting  the  loss;  but 
the  principle  was  not  limited  to  contracts.  The  principle 
which  I  have  enunciated  goes  further,  and  if  there  is  a  money 
or  any  other  benefit  received  which  ought  to  be  taken  into 
account  in  diminishing  the  loss  or  in  ascertaining  what  the  real 
loss  is  against  which  the  contract  of  indemnity  is  given,  the 
indemnifier  ought  to  be  allowed  to  take  advantage  of  it  in 
order  to  calculate  what  the  real  loss  is,  even  although  the  bene- 
fiit  is  not  a  contract  or  right  of  suit  which  arises  and  has  its 
birth  from  the  accident  insured  against.  Of  course,  the  difficulty 
is  to  consider  what  ous^ht  to  be  taken  into  account  in  estimat- 
ing  that  loss  against  which  the  insurer  has  agreed  to  indemnify, 
and  we  have  been  pressed  in  argument  with  many  difficulties. 
One  which  possibly  was  put  to  us  most  strongly,  was  that  the 
contract  of -sale  has  nothing  to  do  with  destruction  by  fire,  and 
if  any  part  of  the  purchase  mone)^  is  to  be  taken  into  account, 
why  is  a  gift  not  to  be  taken  into  account  ?  That  may  be  said 
to  diminish  the  loss  as  well  as  a  contract  of  sale.  The  answer 
is  that  when  a  gift  is  made  afterwards  in  order  to  diminish  the 
loss,  it  is  bestowed  in  such  terras  as  to  show  an  intention  to 
benefit  the  assured,  and  to  give  the  insurer  the  benefit  of  that 
would  be  to  divert  the  gift  from  its  intended  object  to  a  differ- 
ent person.  That  really  was  what  was  decided  in  Burnand  v. 
Rodocanochi.  There  the  monev  bestowed,  not  as  a  matter 
of  right,  but  as  a  gift,  was  intended  to  benefit  the  assured 
beyond   the   amount  which   they  had  got  in  consequence  of 


0.  II.  Castellain  v.  Preston.  293 

any  insurance.      There  is  another  ground  which  may  possibly 
exclude  gifts.     It  may  be  that  the  right  of  the  insurer  to  have 
a  sum  brought  into  account  in  diminution  of  the  loss,  against 
which  he  has  given  a  contract  of  indemnity,  is  confined  to  that 
which  is  a  right  or  other  incident  belonging  to  the  person  in- 
sured, as  an  incident  of  the  property  at  the  time  when  the  loss 
takes  place.     This  definition  would  not  include  a  sum  subse- 
quently bestowed  on  the  assured  by  way  of  gift,  for  it  can  in 
no  way  be  said  to  have  been  appertaining  to  him  as  owner  of 
the  property  at  the  time  when  the  loss  took  place.     But,  in  the 
present  case,  what  we  have  to  consider  is  whether  the  contract 
of  sale  is  not  an  incident  of  the  property,  belonging  to  the 
owners  at  the  time  of  the  loss  in  such  a  way  that  it  ought  to 
be  brought  into  account  in  estimating  the  loss,  against  which 
the   insurer   has   undertaken   to   indemnify.      What  was  the 
position  of  the  parties  ?     The  defendants'  house  was  insured, 
and  there  was  a  loss  from  fire,  the  damage  caused  by  the  fire 
being  estimated  by  the  parties  at  £330.     Ultimately,  the  prop- 
erty having  been   already  agreed  to  be  sold  at  a  fixed  price, 
the  assured  received  the  whole  amount  of  that  price.     Now 
they  did  that  in  respect  of  a  contract  relating  to  the  subject 
insured,  the  house ;  and,  to  my  mind,  if  they  received  the  whole 
amount  of  the  price  which  they  previously  had  fixed  as  the 
value  of  the  house,  that  must  of  necessity  be  brought  into 
account  when  it  was  received,  for  the  purpose  of  ascertaining 
what  was  the  ultimate  loss  against  which  they  had  concluded 
a  contract  of  indemnity  with  the  insurance  office.     Here  the 
purchasers  have  paid  the  money  in  full,  and  as  the  property 
was  valued  between  the  vendors  and  the  purchasers  at  £3,100, 
the  vendors  got  that  sum  in  respect  of  that  which  had  been 
burned,  but  which  had  not  been  burned  at  the  time  when  the 
contract  was  entered  into.      They  had  fixed  that  to  be  the 
value,  and  then  any  money  which  they  get  from  the  purchasers, 
and  which  together  with  £330,  the  sum  paid   by   the  office, 
exceeds  the  value  of  the  property  as  fixed  by  them  under  the 
contract  to  sell,  must  diminish,  and  in  fact  entirely  extinguishes 
the  loss  occasioned  U)  the  vendors  of  the  property  by  the  fire. 
Therefore,   though   it  cannot,  to  my  mind,  be  said  that  the 
insurers  are  entitled,  because  the  purchase  is  completed,  to  get 
back  the  money  which  they  have  paid,  yet  they  are  entitled  to 


294  Insurance  :   Fire,  Life,  Marine.  o.  n. 

take  into  account  the  money  subsequently  received  under  a 
contract  for  the  sale  of  the  property  existing  at  the  time  of  the 
loss,  in  order  to  see  what  the  ultimate  loss  was  against  which 
they  gave  their  contract  of  indemnity.  On  the  principle  of 
DarreJl  v.  Tihhetts,  when  the  benefit  afterwards  accrued  by 
the  completion  of  the  purchase,  the  insurance  company  were 
entitled  to  demand  that  the  money  paid  by  them  should  be 
brought  into  account.  Therefore  the  conclusion  at  which  I 
have  arrived  is,  that  if  the  purchase  money  has  been  paid 
in  full,  the  insurance  office  will  get  back  that  which  they  have 
paid,  on  the  ground  that  the  subsequent  payment  of  the  price 
which  had  been  before  agreed  upon,  and  the  contract  for  pay- 
ment of  which  was  existing  at  the  time,  must  be  brought  into 
account  by  the  assured,  because  it  diminishes  the  loss  against 
which  the  insurance  office  merely  undertook  to  indemnity  them. 
In  my  opinion,  therefore,  the  decision  below  was  erroneous.  I 
think  Chitty,  J.,  based  it  upon  this,  that  in  this  case  there  was 
no  right  of  subrogation,  no  contract  which  the  office  could 
have  insisted  upon  enforcing  for  their  benefit.  I  think  it  im- 
material to  decide  that  question,  because  the  vendors  have 
exercised   their  right   to   insist   upon  the  completion   of   the 

purchase.* 

Judgment  reversed. 

'  Here  follows  a  long  opinion  by  Bowen,  L.  J. 

It  is  not  probable  that  the  doctrine  of  this  ease  will  prevail  in  the  United 
Stfttes.  Compare  Nelson  v.  Bound  Brook  Mut.  Fire  Ins.  Co.,  43  N.  J.  Eq. 
256.  King  v.  State  Mut.  Fire  Ins.  Co.,  7  Cush.  1.  International  Trust  Co.  v. 
Boardman.  149  Mass.  161.  Insurance  Co.  v.  Updegraff,  21  Pa.  St.  5l3. 
Clinton  v.  Hope  Ins.  Co.,  45  N.  Y.  454.  Smith  v.  Glens  Failcs  Iub.  Co.,  6iB 
N.  Y.  85.     See  supra  §§  32,  158. 


CHAPTER  III. 

GENERAL  PRINCIPLES. 

CkmmiTrmiation  and  Construction  of  the  Contraot. 

Supreme  Court  op  Judicature,   1889. 
THOMPSOJNT   V.   ADAMS. 

(L.  R.,  23  Q.  B.  D.  361.) 
A  valid  agreement  to  insure  may  be  closed  either  by  parol  or  by  a  binding  slip. 

Mathew,  J. — This  was  an  action  brought  to  recover  the 
5um  of  £100,  which  it  was  alleged  by  the  plaintiffs  the  defend- 
ant had  agreed  to  cover  by  an  insurance  against  fire  upon  the 
goods  of  the  plaintiffs  in  premises  of  theirs  in  New  Zealand, 
The  action  was  resisted  on  the  ground  that  there  had  been  no 
contract  of  insurance,  or  in  the  alternative,  if  there  had  been 
a  contract  of  insurance,  that  it  was  subject  to  conditions  which 
had  not  been  fulfilled,  and,  therefore,  that  tiie  underwriters 
were  not  liable. 

The  plaintiffs  are  merchants  carrying  on  business  in  New 
Zealand,  and  they  were  represented  in  this  country  by  a  firm 
of  Geard  &  Sons,  who  acted  for  them  under  a  power  of  attor- 
ney. They  instructed  Geard  &  Sons  to  effect  insurances  upon 
goods  on 'their  premises  in  New  Zealand ;  and  Messrs.  Geard  & 
Sons,  for  that  purpose,  about  the  month  of  October,  1886, 
placed  themselves  in  communication  with  a  firm  of  insurance 
brokers  of  high  standing,  Messrs.  Collins  &  Co.,  who  undertook 
to  endeavor  to  effect  insurances  to  the  amount  of  X20,000. 
Now,  insurances  had  been  effected  in  the  same  way  previously, 
and  amongst  the  insurances  previously  effected  were  some  at 
Lloyd's.  It  appears,  within  the  last  four  or  five  years  the 
underwriters  at  Lloyd's  have  undertaken,  in  addition  to  their 
ordinary   business,   the   business   of    insurances   against   risks 


296  Insurance  :    Fijuo,  Life,  Marine.  o.  hi. 

on  land — against  fire  risks— and  insurances  had  for  this 
period  been  effected  at  Lloyd's  by  Messrs.  Thompson  ;  and 
Mr.  Adams,  the  present  defendant,  it  appeared,  had  taken  a 
line  on  some  of  the  previous  policies.  Messrs.  Collins  &  Co., 
not  being  members  of  Lloyd's,  had  placed  themselves  in  com- 
munication with  Mr.  Bray,  an  insurance  broker,  who  was 
entitled  to  effect  insurances  at  Lloyd's ;  and  Mr.  Bray,  in  ac- 
cordance with  the  usual  course  of  business,  prepared  a  slip  con- 
taining the  particulars  of  the  proposed  insurances,  and  showing 
the  risk  in  the  same  way  as  if  it  were  a  marine  risk  to  the 
underwriters  at  Lloyd's.  Amongst  others  the  risk  was  shown 
to  the  defendant,  who  initialed  the  slip  on  behalf  of  others 
whom  he  represented  for  £300,  of  which  £100  represented  the 
amount  of  his  insurance. 

In  the  ordinary  course  with  reference  to  risks  of  this  de- 
scription, as  well  as  with  reference  to  maritime  risks,  the  slip  is 
followed  by  a  policy  of  insurance.  In  the  particular  case  the 
slip  was  initialed  in  October,  1886.  The  policy  ought  to  have 
been  put  forward  through  the  broker  and  signed  by  the  under- 
writers ;  but,  strange  to  say,  no  policy  was  tendered  for  signa- 
ture down  to  the  end  of  the  month  of  February  following.  On 
February  28th  news  reached  this  country  that  the  premises  of 
the  plaintiffs  had  been  burnt  down  on  the  previous  day,  and 
a  quantity  of  their  goods  destroyed.  Up  to  this  time,  as  no 
policy  had  been  issued,  no  premiums  had  been  paid,  but  upon 
March  1st  the  premiums  upon  all  the  insurances  were  paid  by 
the  plaintiffs  to  Messrs.  Collins  &  Co.  The  defendant,  how- 
ever, with  other  underwriters,  refused  to  accept  the  premium, 
or  to  sign  a  policy,  or  to  pay  the  amount  for  which  the  slip 
had  been  initialed.  Upon  that  the  claim  was  put  forward 
against  the  defendant  upon  the  slip,  and  it  was  asserted  by  the 
plaintiffs  that  the  slip  was  a  sufficient  insurance  under  the  cir- 
cumstances, and  that  the  fact  that  no  policy  had  subsequently 
been  signed  was  immaterial.  The  defendant  set  up  as  a  defense 
the  absence  of  the  policy,  and  declined  to  pay.  Under  those 
circumstances  it  was  that  the  action  was  brought  against  him. 

Now  several  lines  of  defence  were  adopted  by  the  defend- 
ant before  me,  and  were  argued  with  great  ability  on  his 
behalf.  In  the  first  place  it  was  said  there  was  no  policy 
of   insurance.     In   the   second    place   it   was   said,  as    I   have 


o.  in.  Thompson  v.  Adams.  297 

already  mentioned,  that  if  there  were  any  contract  of  insur- 
ance, it  was  a  contract  subject  to  the  condition  that  a  policy 
should  be  subsequently  issued.  Thirdly,  it  was  said  that  in 
the  particular  case  the  conduct  of  the  phiintiffs  and  their  agents 
showed  that  they  had  abandoned  the  insurance,  and  elected 
not  to  complete  it  by  a  policy,  and,  therefore,  that  the  defend- 
ant was  not  liable.  It  was  said  that  it  was  a  breach  of  good 
faith  on  the  part  of  the  plaintiffs  to  put  forward  a  poHcy 
which  never  would  have  been  put  forward  if  the  fire  bad  not 
occurred. 

It  was  said  that  this  alleged  contract  was  only  to  be  gath- 
ered from  the  slip  initialed  by  the  underwriters,  but  that  the 
slip  was  no  contract ;  that  it  was  only  an  honorary  undertak 
ing  on  the  part  of  the  underwriters  to  make  a  contract  sub 
sequentlv,  and  that  being  so,  the  underwriters  chose  in  the 
present  case  not  to  be  bound  by  it.  It  was  alleged  that  it  was 
right  and  fair,  under  the  circumstances,  that  they  should  not 
be  bound  by  it,  and  that,  therefore,  there  was  an  end  of  the 
matter.  I  had  evidence  laid  before  me  with  reference  to  this 
curious  point,  for  it  strikes  one  at  first  glance  that  it  was  cer- 
tainly a  most  extraordinary  course  of  business  that  the  under- 
writers were  setting  up.  They  were  suggesting  that  it  should 
be  taken  that  this  slip  was  procured,  not  for  the  purpose  of 
securing  protection  to  the  assured,  but  of  getting  a  piece  of 
paper  with  some  writing  upon  it,  which  had  no  meaning  what- 
ever in  point  of  law.  That  did  not  seem  very  likely.  One 
knows  how  important  it  is  that  there  should  be  a  prompt  insur- 
ance in  respect  of  goods  against  fire  risks.  Considering  how 
great  the  risk  is  to  an  individual,  and  how  small  a  premium 
he  has  to  pay,  the  great  object  is  to  get  himself  insured  against 
damage  by  fire,  and  according  to  this  theory  no  man  could 
effect  a  prompt  insurance  at  Lloyd's  against  damage  by  fire. 
There  must  be  an  interval  between  the  slip  and  the  subsequent 
policy,  and  that  interval  would  leave  the  underwriter  free,  if 
he  thought  proper  not  to  accept  the  risk.  Approaching  the 
consideration  of  the  evidence  by  the  light  of  common  sense,  I 
was  prepared  for  the  result.  The  plaintiff's  witnesses  all  said  * 
that  the  slip  was  a  contract,  and  regarded  as  a  binding  legal 
contract  to  effect  a  subsequent  insurance.  There  is  no  statu- 
tory difficulty  in  the  way,  and  no  reason  why  the  shp  should 


298  Insurance  :    Fire,  Life,  Marine.  o.  hi. 

not  be  a  binding  contract,  and  there  is  every  reason  for 
supposing  that  such  would  be  the  intention  of  the  person 
presenting  the  slip  to  be  initialed  in  respect  of  the  risk.  On 
the  other  hand,  there  was  the  evidence  of  the  underwriters, 
and  the  underwriters  sought  to  set  up  a  custom  to  treat 
these  slips  as  honorary  undei*takings  only.  It  has  become 
manifest  that  they  could  not  rely  upon  a  single  fact  to 
prove  the  existence  of  the  alleged  custom,  and  that  they 
were  only  treating  me  with  what  a  judge  has  so  often  to  hear, 
an  opinion — -a  strong  opinion — of  the  witnesses  on  the  one  side 
as  to  the  merits  of  the  case,  and  of  what  the  result  of  the  liti- 
gation ought  to  be.  All  these  gentlemen  thought  it  was  very 
wrong  under  the  circumstances  of  this  case  that  this  slip 
should  be  an}^ thing  more  than  an  undertaking,  out  of  which 
the  underwriter  could  get  if  he  thought  fit.  Some  light  was 
thrown  upon  the  value  of  their  opinion  by  the  evidence  of  one 
of  the  principal  witnesses,  who  said  :  "  I  regard  this  slip  against 
fire  risks  in  the  same  way  as  a  slip  against  marine  risks,  and 
a  slip  against  marine  risks  is  onl}^  an  undertaking  in  honor, 
because  the  statute  forbids  that  it  should  be  more,  and  I  con- 
sider the  statute  applies  to  an  insurance  against  fire,  and  there- 
fore it  is  to  be  treated  exactly  as  the  same  thing,  and  that  is 
the  custom  at  Lloyd's."  Unfortunately,  the  reasoning  broke 
down,  because  the  statute  does  not  apply,  and  there  is  no 
reason  why  a  contract  should  not  be  entered  into  by  the  slip ; 
there  is  every  reason,  indeed,  to  suppose  that  the  parties  would 
intend  it  to  be  a  contract,  and  upon  that  point  I  am  against 
the  defendant.  I  think  there  was  a  binding  contract  to  insure, 
and  that  the  contract  contained  in  the  slip  is  not  one  from 
which  the  underwriter  could  escape  on  the  ground  that  it  was 
only  optional  whether  or  not  he  should  go  on  with  the  con- 
tract, and  perfect  it  by  a  policy  of  insurance. 

Then  there  was  an  alternative  point,  and  it  was  that  to 
which  Mr.  Barnes  bent  all  his  energy ;  he  said,  assuming  that 
this  slip  is  to  be  treated  as  a  protecting  note,  like  that  which  is 
ordinarily  issued  by  an  insurance  company  (for  insurance  com- 
panies recognize  the  necessity  for  prompt  insurance,  and  before 
the  policy  is  issued  they  will  issue  a  protecting  note  which  will 
have  all  the  effect  of  a  policy  until  the  document  has  been  pre- 
pared), still  there  ought  to  be  read  into  this  slip  an  implied  con- 


0.  III. 


Thompson  v.  Adams.  299 


dition.  An  implied  condition  isacondition  to  be  proved  by  cir- 
cumstantial evidence,  not  by  any  tiling  tliat  passes  in  a  particular 
case  in  terms  between  the  plaintiff  and  the  defendant,  but  a  con- 
tract to  be  inserted  because  the  conduct  of  the  parties  shows  it  is 
the  basis  of  the  whole  arrangement.  The  proviso,  said  Mr. 
Barnes,  that  I  ask  to  read  in  is  this  :  the  contract  contained  in  the 
slip  is  to  be  upon  the  condition,  that  within  a  reasonable  time  the 
policy  is  put  forw^ard  for  signature,  and  if  it  be  not  put  foi- 
ward  within  a  reasonable  time  the  insurance  is  to  be  at  an  end. 
That  was  the  proviso  that  I  was  asked  to  insert,  as  it  were,  in 
this  slip ;  and  really  the  sole  ground  upon  which  that  argument 
rested  appeared  to  me  to  be  that  there  is  an  interval  ordinarily 
between  the  date  of  the  slip  and  the  time  when  the  policy  is 
sent.  The  course  of  business  is,  that,  after  the  slip  has  been 
completely  initialed,  the  policy  should  be  prepared  by  the 
broker  (Mr.  Bray  in  this  case),  and  submitted  to  the  different 
underwriters ;  and  when  they  have  signed  the  policy,  as  a  mat- 
ter of  business,  the  amount  of  the  premium  appears  for  the 
first  time  in  the  accounts,  and  the  contract  is  supposed  to  be 
complete  in  all  formal  particulars.  Now,  that  is  inevitable. 
That  delay  between  the  slip  and  the  policy  it  is  impossible  to 
avoid.  In  the  first  place,  it  is  not  because  a  particular  under- 
writer initials  a  slip,  that  the  matter  is  completed  at  Lloyd's, 
or  completed  anywhere  else.  The  broker  has  to  go  round  and 
get  all  the  risk  covered ;  but,  further,  he  has  to  obtain  in  many 
oases  precise  information  as  to  the  nature  of  the  risk — what  is 
called  technically  the  wording — and  when  the  property  insured 
is  property  abroad,  the  interval  would  be  longer,  necessarily, 
than  if  it  were  at  home.  On  this  point  again  I  had  a  great 
body  of  evidence  laid  before  me  on  each  side.  The  plaintiff's 
witnesses  said  the  delay  is  nothing ;  the  matter  is  complete 
when  the  slip  is  initialed.  That  is  the  business  view  of  the 
affair.  The  underwriters  are  none  the  worse  off  for  any  delay  : 
they  very  often  do  not  trouble  themselves  very  much  as  to  the 
time  the  policy  comes  forward  ;  and  in  support  of  that  view 
the  plaintiffs  produced  a  number  of  slips,  some  initialed  by  the 
defendant  himself,  in  which  it  appeared  there  had  been  a  long 
interval,  of  weeks  and  months  in  some  instances,  between  the 
date  of  the  slip  and  the  date  of  the  policy.  On  the  other  hand, 
witnesses  were  called  for  the  defendant,  who  said  that  the 


300  Insurance  :    Fire,  Life,   Marine!  o.  hi. 

understanding  was  that  tlje  policy  was  to  be  put  forward 
promptly,  and  if  it  was  not  put  forward  the  transaction  ought 
to  be  regarded  as  being  at  an  end.  But,  again,  no  single  in- 
stance could  be  adduced  by  any  of  those  witnesses  to  throw 
hght  on  a  supposed  course  of  business,  and  I  am  satisfied  that 
the  defendant's  contention  upon  this  point  is  wrong.  See  what 
the  consequences  would  be  of  adopting  their  view.  If  such  a 
clause  was  to  be  written  into  the  policy,  there  must  necessarily 
be  an  interval  of  time  between  initialing  the  slip  and  the  com- 
pletion of  the  policy,  during  which  preparations  would  be  made 
for  laying  the  policy  before  the  underwriters  for  their  signa- 
ture. "What  is  the  position  of  the  underwriter  meanwhile? 
Clearly  he  is  on  the  risk.  Then,  according  to  the  argument,  if 
the  policy  be  put  forward  within  a  reasonable  time  he  is  bound 
to  sign  it,  legally  bound  to  sign  it.  Then,  in  the  interval,  he 
is  upon  the  risk ;  but,  according  to  the  defendant's  argument, 
this  proviso  would  enable  the  assured,  at  the  expiration  of  a 
reasonable  time,  to  be  off.  Having  kept  the  underwriter  on 
the  risk,  and  the  interval  being  so  ended,  he  could  say  ;  I 
avail  myself  of  that  proviso,  which  is  to  be  treated  as  part  of 
the  slip,  and  I  get  rid  of  my  liability  to  pay  the  premium. 
When  the  defendant's  witnesses  were  examined,  they  were 
compelled  to  prove  a  course  of  conduct  which  was  totally  in- 
consistent with  such  a  state  of  things,  because  it  was  proved, 
that,  when  there  was  delay,  repeated  demands  were  made  by 
the  underwriters  themselves  as  to  the  reason  for  the  delay. 
There  was  one  answer  of  the  defendant  which  really  put  him 
out  of  court  on  this  matter.  He  was  asked  :  "  Now,  if  no  fire 
had  occurred  in  this  case,  and  the  premium  had  been  tendered 
to  you  in  the  month  of  February,  would  you  have  taken  it  ?  " 
"  Yes,"  he  said,  "  I  should  have  regarded  the  tender  of  the 
premium  as  an  indication  of  good  faith,  and  I  should  have 
signed  the  policy." 

That  seems  to  me  to  make  an  end  of  that  point  which  had 
been  made  by  the  defendant.  From  the  evidence,  I  find,  as  a 
fact,  that  there  is  necessarily  an  interval  between  the  slip  and 
the  policy  in  all  these  cases ;  and  I  am  satisfied  that  it  would 
be  most  unreasonable  to  read  such  an  implied  contract  into  the 
slip.     There  must  be  judgment  for  the  plaintiffs  upon  the  issues 

tried  before  me.  r  j        ^  ^    vj.     i  ■  *-^ 

Judgment  for  the  plamtijjs. 


c.  III.  LiPMAN  V.  Niagara  Fikk  Ins.  Co.  301 

New  York  Court  of  Appeals,  1890. 
LIPMAN  V.   NIAGARA   FIRE   INS.   CO.     '-' 

(121  N.   Y.  454.) 

The  contract,  whether  closed  by  parol  or  binding  slip,  ia  subject  to  the  terms  oj 
the  usual  policy. 

Appeal  from  judgment  of  the  General  Term  of  the  Su- 
preme Court  entered  upon  an  order  which  aifirmed  a  judg- 
ment in  favor  of  plaintiff  entered  upon  a  verdict. 

This  was  an  action  upon  an  agreement  of  insurance  evi- 
denced by  what  is  termed  by  insurance  men  a  "  binding  slip," 
which  was  in  these  words : 

"  Pell,  Wallack  &  Co.,  Insurances, 
55  Liberty  Street,  New  York,  September  2,  1885. 

"  The  undersigned  do  insure  for  account  of  Shaped  Seam- 
less Stocking  Co.  amounts  as  specified  below  at  1^  for  12 
months  from  September  2,  1885,  on  machinery  and  stock, 
building  No.  3  (as  per  form,  building  situate  Randall's  Island, 
N.  Y.).  This  receipt  binding  until  policy  is  delivered  at  the 
office  of  Pell,  Wallack  &  Co. 

Company.  Amount.  Accepted  by. 

Niagara $2,500  Pollock." 

Andrews,  J. — The  binding  slip  signed  by  the  defendant  was 
not  a  mere  agreement  to  insure,  but  was  a  present  insurance  to 
the  amount  specified  therein.  The  instrument  is  informal.  It 
states  on  whose  account  the  insurance  is  made,  the  property 
covered,  the  amount  insured,  the  term  of  insurance,  and  the  date. 
But  it  does  not  specify  the  risk  insui'ed  against,  nor  does  it  contain 
any  conditions  such  as  are  usually  found  in  insurance  policies. 
The  evident  design  of  the  writing,  as  disclosed  by  the  testimony, 
was  to  provide  temporary  insurance  pending  an  inquiry  by  the 
company  as  to  the  character  of  the  risk,  or,  if  that  was  known, 
during  any  delay  in  issuing  the  policy.  The  secretary  of  the 
defendant  signed  the  binding  slip  upon  the  solicitation  of  Pell, 
Wallack  &  Co.,  insurance  brokers  of  the  plaintiff,  in  the  after- 
noon of  September  2,  1885.  The  officers  of  the  defendant,  hav- 
ing made  inquiry  as  to  the  risk,  notified  the  plaintiff's  brokers 
before  one  o'clock  of  the  afternoon  of   Sej)tember  3,  that   the 


302  Insurance  :    Fire,  Life,  Marine.  o.  hi. 

defendant  declined  it.  The  property  described  in  the  binding 
slip  was  destroyed  by  fire  in  the  afternoon  of  September  3,  the 
fire  having  commenced  about  three  o'clock. 

The  claim  on  the  one  side  is  that  the  binding  slip  was  a 
complete  and  perfect  contract,  binding  the  defendant,  according 
to  its  language,  "  until  policy  is  delivered  at  the  oflBce  of  Pell, 
Wallack  &  Co.,"  and  not  terminable,  therefore,  by  notice  prior 
to  that  time,  or,  if  so  terminable,  then  only  upon  reasonable 
notice,  which,  as  is  claimed,  was  not  given,  nor  in  any  event 
upon  notice  to  the  plaintiff's  brokers,  they  not  being  agents  of 
the  plaintiff  for  the  purpose  of  receiving  such  notice. 

It  is  insisted  on  the  other  side  that  the  contract  evidenced 
by  the  binding  slip  was  a  contract  subject  to  the  conditions 
contained  in  the  ordinary  policy  in  use  by  the  company,  one  of 
which  contained  the  following  clause : 

"  This  insurance  may  be  determined  at  any  time  by  request 
of  the  assured,  or  by  the  company  on  giving  notice  to  that 
effect  to  the  assured,  or  to  the  person  who  may  have  procured 
this  insurance  to  be  taken  by  this  company." 

The  notice  given  on  the  3d  of  September  prior  to  the  fire 
terminated,  as  is  insisted,  the  contract  of  insurance  pursuant  to 
this  condition.  We  think  there  can  be  no  doubt  that  the  true 
construction  of  the  binding  slip  only  obligated  the  defendant 
according  to  the  terms  of  the  policy  in  ordinary  use  by  the 
company.  There  is  no  other  reasonable  interpretation  of  the 
transaction.  The  binding  slip  was  a  short  method  of  issuing  a 
temporary  policy  for  the  convenience  of  all  parties,  to  continue 
until  the  execution  of  the  formal  one.  It  would  be  unreason- 
able to  suppose  either  that  the  brokers  expected  an  insurance 
except  upon  the  usual  terms  imposed  by  the  company,  or  that 
the  secretary  of  the  company  intended  to  insure  upon  any 
other  terms.  The  right  of  an  insurance  company  to  terminate 
a  risk  is  an  important  one.  It  is  not  reserved  in  terms  in  the 
binding  slip,  and  could  not  be  exercised  at  all  so  long  as  no 
policy  should  be  issued,  unless  the  condition  in  the  policy  is 
deemed  to  be  incorporated  therein. 

Upon  the  plaintiff's  contention  the  company  could  not  can- 
cel the  risk  so  long  as  the  binding  slip  was  in  force,  and  the 
only  remedy  of  the  company  to  get  rid  of  the  risk  would  be  to 
issue  the  policy  and  then  immediately  cancel  it.     The  binding 


0.  III.  LiPMAN  V.  Niagara  Fire  Ins.  Co.  303 

slip  was  a  mere  memorandum  to  identify  the  parties  to  the 
contract,  the  subject-matter,  and  the  principal  terms.  It  refers 
to  the  policy  to  be  issued.  The  construction  is,  we  think,  the 
same  as  though  it  had  expressed  that  the  present  insurance  was 
under  the  terms  of  the  usual  policy  of  the  company  to  be  there- 
after delivered. 

The  trial  judge  was  of  opinion  that  the  binding  slip  was  not 
a  complete  and  independent  contract  of  insurance,  subject  to 
no  conditions ;  but  he  ruled  that  the  obligation  of  the  defendant 
was  to  be  determined  by  the  question,  whether  the  condition 
in  the  defendant's  policy,  that  the  company  might  terminate 
the  policy  b}'^  notice  to  the  "  person  who  procured  the  insur- 
ance," was  a  usual  one,  and  submitted  the  case  to  the  jury  on 
that  issue.  The  case  of  DeGrove  v.  Metropolitan  Ins.  Co.^  61 
N.  Y.  594,  is,  we  think,  a  decisive  authority  against  the  view 
of  the  learned  trial  judge.  The  General  Term  dissented  from 
the  ruling  of  the  trial  judge  on  this  point,  and  held  that  notice 
to  Pell,  Wallack  (fe  Co.,  the  brokers  who  procured  the  insur- 
ance, was  authorized  by  the  condition  in  the  policy.  It,  how- 
ever, sustained  the  judgment  on  the  ground  that  notice  did  not 
terminate  the  contract  until  a  reasonable  time  had  elapsed  after 
it  was  given,  and  that  the  two  and  a  half  hours  which  inter- 
vened between  the  notice  and  the  happening  of  the  fire  was 
not  such  reasonable  time,  and  that  consequently  the  insurance 
was  then  in  force. 

We  think  there  can  be  no  reasonable  doubt,  upon  the  lan- 
guage of  the  condition,  that  notice  to  the  brokers  was  a  good 
notice,  and  that,  if  otherwise  sufficient,  it  terminated  the  de- 
fendant's liability.  The  brokers  procured  the  insurance.  In 
fact,  their  duties  in  respect  to  it  had  not  terminated.  The 
binding  slip  provided  that  the  policy,  when  issued,  should  be 
delivered  at  their  office.  The  notice  was  given  to  persons  to 
whom  notice  might  be  given  by  the  express  language  of  the 
policy.  The  special  language  of  the  condition  in  the  defend- 
ant's policy  upon  this  point  was,  it  is  said,  inserted  to  meet  the 
objection  pointed  out  by  this  court  in  Hermann  v.  Niagara 
Fire  Ins.  Co.,  100  K  Y.  415. 

It  remains  to  consider  whether  under  the  condition  the 
policy  terminated  eo  instanti  on  notice  by  the  company.  There 
is  no  language  which  postpones  the  effect  of  notice  until  the 


304  Insurance  :    Fire,  Life,  Marine.  o.  m. 

lapse  of  a  reasonable  time  thereafter.  The  rule  is  well  settled, 
that,  where  a  person  undertakes  to  do  an  act  upon  notice  fi'ora 
another,  it  is  implied  that  he  shall  have  a  reasonable  time  after 
he  is  called  upon  to  do  the  thing,  or  render  the  service,  and, 
no  time  for  performance  being  specified,  the  law  gives  him  a 
reasonable  time.  But  where  a  contract  fixes  the  time  of  per- 
formance the  rule  of  reasonable  time  has  no  application.  We 
have  been  referred  to  no  case,  nor  have  we  found  an}'^,  which 
sanctions  the  doctrine,  that,  wliere  one  has  assumed  an  obliga- 
tion which  is  to  continue  until  notice  given  to  the  other  party, 
the  obligation  continues  after  notice.  If  in  this  case  the  pre 
mium  has  been  paid  beyond  the  period  when  notice  was  given, 
then  the  bare  notice  would  not  have  terminated  the  risk.  But 
this  for  the  reason  that  the  company  is  bound  in  such  case,  in 
order  to  terminate  the  policy,  not  only  to  give  notice,  but  to 
refund  or  offer  to  refund  the  insurance  premium.  This  is  the 
construction  placed  on  clauses  like  the  one  in  question.  The 
cancellation  in  such  case  only  takes  place  on  notice  and  return 
of  the  premium  for  the  unexpired  term.  Va7i  Yalhenburgh  v. 
Lenox  Fire  Ins.  Co.,  51  N.  Y.  465 ;  Wood  on  Fire  Ins., 
§  106. 

The  privilege  reserved  by  the  company  to  terminate  the 
policy  on  notice  cannot  be  exercised  under  the  circumstances 
which  would  make  it  operate  as  a  fraud  on  the  insured,  as  in 
case  of  notice  given  pending  an  approaching  conflagration, 
threatening  to  destroy  the  property  insured.  Home  Ins.  Co. 
V.  Heck,  65  111.  111. 

In  the  present  case  no  premium  had  been  paid.  The  notice 
was  given  in  good  faith.  There  was  no  special  emergency  at 
the  time.  It  was  given  during  business  hours,  in  ordinary 
course. 

The  contract  provides  that  it  should  be  terminated  on 
notice.  We  perceive  no  reason  why  the  contract  should  not 
be  construed  according  to  its  terms.  The  parties  might  have 
provided  that  the  risk  should  be  carried  by  the  company  after 
notice  for  a  reasonable  time,  to  enable  the  insured  to  place  it 
elsewhere.  But  they  did  not  do  so,  and  even  if  a  custom  of 
that  kind  had  been  proved,  which  was  not,  it  would  have  been 
inadmissible  to  change  or  extend  the  explicit  language  of  the 
contract.     We  think  the  cancellation  was  effected  at  the  time 


o.  ni.  Merchants'   Mutual  Ins.  Co.  v.  Lyman.  305 

of  the  service  of  the  notice.    Mueller  v.  South  Side  Fire  Ins.  Co.^ 
87  Penn.  St.  399  ;  Orace  v.  Am.  G.  Ins.  Co.,  109  U.  S.  278. 

Judgment  reversed. 

United  States  Sctreme  Court,  1872. 
MERCHANTS'   MUTUAL   INS.  CO.  v.  LYMAN". 

(15  WaU.  664.) 

All  antecedent  negotiations  become  merged  in  the  policy  at  the  time  of  ths 
contract. 

Lyman  &  Co.  brought  their  action  in  the  court  below 
against  the  Merchants'  Mutual  Insurance  Company  of  New 
Orleans,  for  the  sum  of  $12,000,  the  value  of  the  brig  Sailor 
Boy,  lost  at  sea  on  the  8th  of  Januar}^  1870,  and  which  was 
insured,  as  they  allege,  by  the  said  company.  Their  petition 
set  forth,  that  on  the  30th  of  October,  1869,  the  company  had 
issued  a  policy  to  them  on  the  brig  for  the  sum  named,  which 
insured  her  until  January  1,  1870. 

That  on  the  15th  December,  1869,  they  applied  to  the  com- 
pany to  insure  them  in  the  same  sum,  upon  the  same  vessel,  for 
three  months  from  the  said  1st  January,  1870. 

That,  after  taking  time  to  consider,  the  company,  on  Decem- 
ber 24, 1869,  proposed  to  renew  the  insurance  for  the  premium 
of  $600,  and  that  on  December  31,  the  plaintiffs  accepted  this 
proposition  for  renewal,  and  that  the  company  on  that  day 
agreed  with  them  that  it  would  issue  the  policy,  and  make  it 
out  and  send  it  to  them,  and  receive  the  premium. 

That  on  the  15th  January,  1870,  the  plaintiffs  sent  for  the 
policy  and  paid  the  premium,  and  the  companj^  issued  to  plain- 
tiffs the  policy  annexed  to  the  petition ;  that  the  said  policy 
was  but  a  compliance  with  and  a  formal  statement  of  the 
agreement  to  renew  the  insurance,  made  December  31,  1869. 

That  on  the  8th  of  January,  1870,  the  brig  was  lost,  etc. 

Along  with  their  petition,  the  plaintiffs  filed  two  policies  of 
insurance,  on  their  face  such  as  above  stated  ;  that  is  to  say, 
one  dated  October  30,  1869,  for  two  months,  expiring  January 
1, 1870,  and  one  dated  January  15, 1870,  and  which,  by  its  terms, 
purported  to  make  an  insurance  "from  the  1st  of  January, 
1870,  to  the  1st  of  April,  1870." 
20 


306  Insurance  ;    Fire,  Life,  Marine.  o.  in 

On  the  trial  it  appeared  that  the  plaintiffs,  when  they  re 
newed  the  policy  of  the  15th  January,  and  paid  the  premium 
for  insurance,  knew  that  the  vessel  was  lost,  and  that  the 
defendants  had  no  such  knowledge  or  information. 

As  on  this  state  of  facts  it  would  be  obvious  that  no  action 
could  be  sustained  on  the  policy — and  indeed  that,  in  point 
of  fact,  the  taking  of  such  a  policy,  and  causing  the  defend- 
ant to  sign  it,  would  have  been  a  fraud — the  plaintiffs  framed 
their  petition  on  the  assumption,  and  directed  their  evidence 
to  the  showing  that  the  execution  of  the  policy  was  but  carry- 
ing into  effect  an  agreement  made  before  the  loss  of  the 
vessel. 

In  order  to  sustain  this  their  case  they  offered  in  evidence 
the  deposition  of  their  agent,  which  gave  an  account  of  con- 
versations had  by  him  in  reference  to  a  renewal  of  the  in 
surance  with  some  one  in  the  defendants'  oflBce.  The  de- 
fendants objected  to  this  testimony,  on  the  ground  that  there 
was  a  written  application  for  and  contract  of  insurance  be- 
tween the  parties  for  the  same  amount  of  insurance  and  same 
amount  of  premium,  on  the  same  object  insured,  the  vessel 
called  Sailor  Boy^  \>y  the  same  plaintiffs  as  insured,  and 
same  defendants  as  insurers,  for  the  same  space  of  time,  to 
wit,  from  the  1st  day  of  January,  1870,  to  the  31st  March, 
1870  ;  that  the  plaintiffs  had  no  right  to  contradict  the  writ- 
ten application  aforesaid  by  proof  of  a  previous  verbal  con- 
tract ;  that  the  plaintiffs'  right  of  action,  if  any,  was  on  the 
written  application  and  contract  aforesaid,  and  that  they  could 
not  ignore  the  said  written  contract  to  fall  back  on  an  alleged 
previous  verbal  contract  of  the  same  tenor  and  purport ;  that 
the  evidence  showing  that  when  the  said  written  contract 
was  executed,  the  plaintiffs  and  their  agents  were  aware  of 
the  fact  of  the  previous  loss  and  abandonment  of  the  Sailor 
Boy.  the  said  written  application  and  policy  were  not  binding 
in  law,  but  were  nevertheless  the  contract  of  the  parties  sub- 
ject to  be  gainsaid  by  proper  allegations  and  proof  of  fraud ; 
that  the  plaintiffs  could  not  ignore  the  written  contract. 

But  the  court  ruled  as  follows  : 

"  The  plaintiffs  put  their  entire  case  upon  a  verbal  contract 
to  renew  the  insurance  made,  as  they  allege,  on  the  31st  day 
of  December,  eight  days  before  the  loss.     They  admit  that 


o.  III.  Merchants'  Mutual  Ins.  Co.  v.  Lyman.  807 

when  they  sent  for  the  written  policy,  on  the  15th  of  January, 
they  knew  of  the  loss,  and  that  they  could  not  recover  on  the 
written  policy  standing  by  itself,  but  they  say  that  the  real 
contract  was  made  on  the  31st  of  December,  and  that  they  had 
a  right  to  go  to  the  jury  on  that  issue." 

The  court  accordingly  overruled  the  objection  and  admitted 
the  testimony.  A  verdict  was  given,  and  judgment  entered 
for  the  plaintiffs,  for  the  sum  insured,  and  interest. 

The  case  being  now  here  on  error. 

Mr.  Justice  Miller  delivered  the  opinion  of  the  court. 

Undoubtedly  a  valid  verbal  contract  for  insurance  may  be 
made,  and  when  it  is  relied  on,  and  is  unembarrassed  by  any 
written  contract  for  the  same  insurance,  it  can  be  proved  and 
become  the  foundation  of  a  recovery  as  in  all  other  cases 
where  contracts  may  be  made  either  by  parol  or  in  writing. 
But  it  is  also  true  that  when  there  is  a  written  contract  of 
insurance  it  must  have  the  same  effect  as  the  adopted  mode 
of  expressing  what  the  contract  is,  that  it  has  in  other  classes  of 
contract,  and  must  have  the  same  effect  in  excluding  parol 
testimony  in  its  application  to  it,  that  other  written  instru- 
ments have. 

Counsel  for  the  defendants  in  error  here,  relies  on  two 
propositions,  namely,  that  the  policy,  though  executed  Janu- 
ary 5th,  is  really  but  the  expression  of  a  verbal  contract,  made 
the  31st  day  of  December  previous,  and  that  the  loss  of  the 
vessel  between  those  two  dates  does  not  invalidate  the  con- 
tract, though  known  to  the  insured  and  kept  secret  from  the 
insurers ;  and  secondly,  that  they  can  abandon  the  written 
contract  altogether  and  recover  on  the  parol  contract. 

We  do  not  think  that  either  of  these  propositions  is  sound. 

Whatever  may  have  been  the  precise  facts  concerning  the 
negotiations  for  a  renewal  of  the  insurance  previous  to  the 
execution  of  the  policy,  they  evidently  had  reference  to  a 
written  contract,  to  be  made  by  the  company. 

When  the  company  came  to  make  this  instrument,  they 
were  entitled  to  the  information  which  the  plaintiffs  had  of  the 
loss  of  the  vessel.  If  then  they  had  made  the  policy,  it  would 
have  bound  them,  and  no  question  would  have  been  raised  of  the 
validity  of  ihe  instrument  or  of  fraud  practiced  by  the  insured 


308  Insurance  :    Firk,  Life,  Marine.  o.  in. 

On  the  other  hand,  if  they  had  refused  to  make  a  policy, 
no  injurv  would  have  been  done  to  the  phiintiffs,  and  they 
would  then  have  stood  on  their  parol  contract  if  they  had  one, 
and  did  not  need  a  policy  procured  by  fraudulent  concealment 
of  a  material  fact  at  the  time  it  was  executed  and  the  premium 
paid. 

To  permit  the  plaintiffs,  therefore,  to  prove  by  parol  that 
the  contract  of  insurance  was  actually  made  before  the  loss 
occurred,  though  executed  and  delivered  and  paid  for  after- 
ward, is  to  contradict  and  vary  the  terms  of  the  policy  in  a 
matter  material  to  the  contract,  which  we  understand  to  be 
opposed  to  the  rule  on  that  subject  in  the  law  of  Louisiana  as 
well  as  at  the  common  law. 

We  think  it  equally  clear,  that  the  terms  of  the  contract 
having  been  reduced  to  writing,  signed  by  one  party  and 
accepted  by  the  other  at  the  time  the  premium  of  insurance 
was  paid,  neither  party  can  abandon  that  instrument,  as  of  no 
Talue  in  ascertaining  what  the  contract  was,  and  resort  to  the 
verbal  negotiations  which  were  preliminary  to  its  execution, 
for  that  purpose.  The  doctrine  is  too  well  settled  that  all 
previous  negotiations  and  verbal  statements  are  merged  and 
excluded  when  the  parties  assent  to  a  written  instrument  as 
expressing  the  agreement.  And  it  is  hardly  necessary  to  say, 
that  the  party  who  has  destroyed  the  validity  of  that  contract 
by  his  own  fraud,  cannot  for  that  reason  treat  it  as  if  it  had 
never  been  made,  and  recover  on  the  verbal  statements  made 
before  its  execution. 

Judgment  reversed,  loitli  directions  to  grant  a  new  trial. 

New  York  Court  of  Appeals,  1860. 
HAEPEH  V.   NEW   YORK  CITY  INS.  CO. 

(22  N.  Y.  441.) 
The  written  portion  of  the  policy  prevails  over  the  general  printed  form. 

This  was  an  action  upon  a  policy  of  insurance,  dated  the 
3d  March,  1853,  whereby  the  defendant  insured  the  plaintiffs 
against  loss  by  fire,  to  the  amount  of  $10,000,  on  their  print- 
ing and  book  materials,  stock,  paper,  stereotype  plates,  fixtures, 
printed  books,  and  steam-engine,  contained  in  certain  brick  build- 


0.  in.  Harper  v.  New  Yokk  City  Ins.  Co.  309 

ings  particularly  described,  with  the  privilege  '•'  for  a  printing- 
office,  bindery,  book-store,  and  steam-boiler  in  the  yard."  The 
printed  conditions  of  the  policy  contained  the  usual  clause, 
that  the  company  should  not  be  liable  for  any  loss  or  damage 
by  fire  "occasioned  by  camphene  or  other  inflammable  liquid." 

It  was  shown  on  the  trial,  that  the  fire,  by  which  the 
plaintiffs'  premises  were  totally  destroyed,  was  occasioned  by 
the  accidental  igniting  of  a  quantity  of  camphene,  kept  for 
cleaning  the  rollers  used  for  fine  printing ;  and  that  such  use 
was  not  merely  advantageous,  but  absolutely  necessary'  in  a 
printing-office. 

There  was  a  verdict  for  the*plaintiffs,  subject  to  the  opinion 
of  the  court,  and  judgment  having  been  entered  thereon,  at 
the  General  Term,  the  defendant  took  this  appeal. 

CoMSTocK,  C.  J. — The  jury  found,  in  answer  to  interroga- 
tories specially  submitted  to  them,  that  the  use  of  camphene 
in  the  manner  proved  was  according  to  a  general  and  estab- 
lished usage  in  the  printing  and  book  business  as  carried  on 
by  the  plaintiffs,  and  that  such  use  was  necessary  in  that  busi- 
ness. In  the  written  part  of  the  policy,  the  subject  of  insur- 
ance is  described  as  the  plaintiffs'  printing  and  book  materials, 
stock,  etc.,  '■^  privileged  for  a  printing  ojflce,  hindery^''  etc.  The 
language  is  identical  with  that  contained  in  the  policy  which 
was  before  us  in  the  case  of  Harper  v.  Albany  Insurance  Com- 
pcmy,  lY  N.  Y.  194.  We  there  held,  for  reasons  which  need  not 
be  repeated,  that  the  insurers  were  liable  for  loss  occasioned  by 
the  necessary  and  customary  use  of  camphene  in  the  plaintiffs' 
business,  although  the  use  of  that  article  was  prohibited,  in 
general  terms,  in  the  printed  conditions  annexed  to  and  form- 
ing a  part  of  the  contract.  In  that  case,  the  printed  form  of 
the  policy,  if  construed  without  reference  to  the  subject  of 
insurance  as  described  in  the  written  part,  proscribed  the  use 
or  presence  of  camphene  for  any  purpose.  In  this  case,  the 
printed  condition  declares,  in  substance,  that  if  the  article  is 
used,  and  a  loss  is  occasioned  thereby,  the  insurer  will  not  be 
liable.     There  is  no  other  distinction  between  the  two  cases. 

And  this  distinction  is  not  one  of  principle.  In  the  case 
cited,  we  found  no  irreconcilable  repugnancy  between  the 
written  and  printed  clauses  of  the  contract.     If  such  a  repug- 


810  Insurance:    Fire,  Life,  Marine.  o.  m. 

nancy  had  been  discovered,  then,  as  the  court  said,  the  printed 
form  must  yield  to  the  more  careful  and  deliberate  written 
language  of  the  parties  in  describing  the  subject  of  insurance, 
at  the  very  moment  when  the  policy  was  issued.  But  it  was 
considered,  that  each  clause  might  take  effect ;  by  insuring  the 
plaintiffs'  stock,  with  the  privilege  of  a  printing-office  and 
book-bindery,  the  use  of  such  materials,  including  camphene, 
as  were  necessary  in  that  business  was  allowed ;  otherwise, 
the  contract  was  a  mere  delusion.  But  the  restraining  clause 
might,  nevertheless,  have  its  full  effect  upon  the  use  of  cam- 
phene for  the  purposes  of  light,  and  for  all  purposes  beyond  its 
necessary  connection  with  the  stock  and  business  insured.  So, 
in  this  case,  camphene  must  be  considered  as  a  part  of  the 
stock  insured ;  its  continued  presence  and  use  were  allowed, 
because  the  business  which  required  its  use  was  expressly  priv- 
ileged. The  printed  condition,  exempting  the  underwriters 
from  loss  when  occasioned  by  this  article,  should  therefore  be 
construed  as  referring  to  uses  not  within  the  privilege  thus 
granted  ;  otherwise,  the  two  parts  of  the  contract  are  repug- 
nant to  each  other,  and  the  printed  form  must  yield  to  the 
deliberate  written  expression.  An  insurance  upon  the  plain- 
tiffs' stock  and  business,  to  be  of  no  effect  if  a  loss  should  be 
occasioned  by  the  combustion  of  an  article  constituting  a  part 
of  that  stock,  and  necessarily  used  in  the  business,  would,  I 
think,  be  an  anomalous  undertaking.  Undoubtedly,  such  a 
contract  might  be  made :  a  policy  can  be  so  framed  as  to  allow 
the  presence  of  a  dangerous  article,  and  even  so  as  to  insure  its 
value,  while  at  the  same  time  it  might  exempt  the  insurer 
from  loss,  if  occasioned  by  the  presence  or  use  of  the  article ; 
but  I  think  it  would  need  very  great  precision  of  language  to 
express  such  an  intention.  Where  camphene  or  any  hazardous 
fluid  is  insured,  and  its  use  is  plainly  admitted,  the  dangers 
arising  from  that  source  are  so  obviously  within  the  risk  under- 
taken, that  effect  should  be  given  to  the  policy  accordingly, 
unless  a  different  intention  is  very  plainly  declared.  And 
such  an  intention,  instead  of  being  hid  away  in  printed  forms, 
remote  from  the  principal  contract,  ought  to  be  found  in  the 
deliberate  expressions  which  are  made  use  of  at  the  time  when 
the  contract  is  entered  into. 

Without  doubt,  all  the  printed  conditions  and  specifications 


0.  III.  Harper  v.  New   Vokk  City   Ins.  (/o.  311 

annexed  to  a  policy  are,  or  at  least  may  be,  a  part  of  it.  But 
they  relate  to  insurance  in  general,  as  practiced  by  the  under- 
writer ;  and  upon,  or  within,  those  forms,  the  parties  to  each 
policy  actually  issued  write  their  own  particular  intention. 
The  plain  meaning  of  the  written  part  should,  therefore,  pre- 
vail, and  other  clauses  must  yield,  if  repugnant,  or  they  must 
be  construed  so  as  to  avoid  a  conflict  of  intention.  In  this 
case,  I  think  the  perils  of  keeping  and  using  camphene  were 
insured  against,  so  far  as  the  keeping  or  use  of  it  was  permitted 
at  all,  and  that  the  clause  which  exempts  the  insurer  from 
liability  should  be  understood  as  applying  to  the  presence  of 
the  article  under  other  conditions.  The  judgment  should  be 
affirmed. 

Selden,  J.  {dissenting). — Contracts  which  belong  to  an  ex- 
tensive class,  such  as  charter-parties,  policies  of  insurance,  etc., 
where  all  are  in  their  main  features  identical,  are  usually 
reduced  to  a  prescribed /brmwZa,  embracing  those  general  pro- 
visions which  are  applicable  to  most  cases  of  the  class,  and 
tHen  printed,  leaving  blank  spaces  to  be  filled  up  in  writing,  so 
as  to  adapt  the  contract  to  the  particular  case.  In  construing 
such  contracts,  if  there  is  any  repugnancy  between  the  written 
and  the  printed  portions,  the  latter  is  to  be  modified  and  con- 
trolled by  the  former.  In  other  words,  those  general  provis- 
ions which  were  framed  for  the  class  at  large  must  yield  to 
such  as  are  more  specific,  and  designed  for  the  particular 
case. 

This  rule,  which  was  applied  in  Harper  v.  Albany  Mutual 
Insurance  Company,  17  N,  Y.  194,  and  Bryant  v.  PoughTceep- 
sie  Mutual  Insurance  Company,  id.  200,  is  equally  applicable 
here.  That  portion  of  the  printed  conditions  incorporated  into 
the  policy  which  related  to  the  various  articles  and  kinds  of 
business  denominated  hazardous  and  extra  hazardous,  and 
those  which  are  subjected  to  special  rates  of  insurance,  virtu- 
ally prohibited  the  use  of  camphene  upon  the  insured  premises. 
But  the  written  portion  insured  the  plaintiffs  upon  their  print- 
ing-office, bindery,  and  book-store,  and  upon  the  materials, 
stock,  and  machinery  therein  ;  and  as  it  appeared  that  cam- 
phene constituted  a  necessary  portion  of  such  stock,  and  was 
essential  to  the  carrying  on  of  the  business  insured,  its  use  was 


812  Insurance  :    Fihk,  I^ife,  Makine.  o.  hi. 

clearly  authorized  by  this  clanso  of  the  policy.  There  was, 
therefore,  a  direct  conflict  between  the  general  provisions  con- 
tained in  the  printed  conditions  of  the  policy  and  the  written 
description  of  the  particular  subject  of  insurance ;  and,  of 
course,  the  latter  must  prevail.  The  use  of  camphene,  there- 
fore, was  authorized,  and  it  was  itself  insured  as  a  part  of  the 
plaintiffs'  stock. 

Thus  far  there  is  no  controversy  between  the  parties,  but 
the  contest  arises  under  another  clause  of  the  policy.  The 
eighth  condition  provides,  that  the  company  "  will  not  be  liable 
for  loss  or  damage  caused  by  lightning,  except  that  which 
results  from  fire  that  may  ensue  therefrom ;  nor  for  any  loss, 
either  by  fire  or  otherwise,  occasioned  by  the  explosion  of  a 
steam-boiler,  or  occasioned  hy  camphene  or  other  inflammable 
liquid^  or  by  the  explosion  of  gunpowder."  The  position  of 
the  defendants  is,  that  the  loss,  as  shown  by  the  proofs,  was 
"  occasioned  by  camphene,"  and  hence  they  are  not  responsi- 
ble. It  becomes  necessary,  therefore,  to  put  a  construction 
upon  that  condition  of  the  policy  which  I  have  just  recited. 

The  counsel  for  the  plaintiffs  contends  that  this  provision 
was  only  intended  to  exempt  the  company  from  liability  for 
any  loss  which  should  be  occasioned  by  camphene  "  in  a  rela- 
tion or  use  outside  of  the  description  and  privilege  "  contained 
in  the  policy.  But  there  are  serious  difficulties  in  the  way  of 
such  a  construction  ;  it  is  an  entire  departure  from  the  lan- 
guage of  the  provision,  which  is  broad  and  general,  embracing 
every  loss  which  should  be  in  any  way  occasioned  by  cam- 
phene. To  make  this  interpretation  compatible  at  all  with  the 
terms  of  the  provision,  it  is  necessary  to  interpolate  a  chiuse 
more  extensive  than  the  entire  provision  as  it  stands.  The 
policy  says  the  insurers  will  not  be  liable  for  any  loss  "  occBr 
sioned  by  camphene."  This  is  said  to  mean,  that  they  will 
not  be  liable  for  such  a  loss,  provided  the  camphene  which 
caused  the  loss  was  outside  the  insured  premises,  or  was  used 
upon  such  premises  in  a  manner  not  authorized  by  the  policy. 
I  know  of  no  rule  for  the  interpretation  of  contracts  which 
warrants  so  extensive  an  interpolation  ;  it  would  make  a  con- 
tract widely  different  from  that  which  would  result  from  the 
terms  used  by  the  parties  themselves. 

The  argument  in  favor  of  this  interpretation  is,  that,  hy 


0.  III.  Harper  v.  New  York  City  Ins.  Co.  313 

force  of  the  rule  that  the  written  is  to  ])i'evail  over  the  printed 
portion  of  the  poHcy,  the  defendants  have  not  only  authorized 
the  use  of  camphene  by  the  plaintiffs  for  certain  purposes,  but 
have  consented  to  include  camphene  itself  as  a  part  of  the 
plaintiffs'  stock,  among  the  articles  insured;  and  that  it  cannot 
be  supposed  that  they  intended  to  exempt  themselves  from 
liabihty  for  a  loss  which  should  be  occasioned  by  one  of  the 
insured  articles,  and  which  was  upon  the  premises  under  the 
precise  circumstances  authorized  by  the  policy. 

The  incongruity  suggested  by  this  argument  is  hardly  suf- 
ficient to  prevent  our  construing  this  contract  as  the  parties 
have  made  it.  What  repugnance  is  there  between  the  provis- 
ion which  authorizes  the  use  of  camphene  in  the  business  of  the 
insured,  and  that  which  exempts  the  company  from  liability  for 
a  loss  ''occasioned  by  camphene"?  I  can  see  none  whatever. 
By  the  written  portion  of  the  policy,  the  insurers  assumed  a 
responsibihty  in  regard  to  the  use  of  camphene,  from  which 
they  were  entirely  exempted  by  the  printed  conditions  relating 
to  hazardous  and  extra-hazardous  business ;  the  eighth  condition 
comes  in  as  a  modification  of  this  responsibility.  It  operates 
as  a  division  and  mutual  distribution  between  the  insurers  and 
the  assured  of  the  risks  resulting  from  the  use  of  this  hazardous 
article.  By  the  two  provisions  combined,  the  insurers  say  to 
the  assured,  we  will  agree  that  the  mere  presence  of  camphene 
upon  the  insured  premises,  or  its  use  there  in  your  business, 
shall  not  vitiate  the  policy  ;  but  if  it  shall  be  the  actual  primary 
cause  of  any  loss,  we  will  not  be  held  responsible.  Such  an 
arrangement  is  not  open  to  any  legal  objection,  but  one  which 
the  parties  had  a  perfect  right  to  make,  and  which  seems  to  me 
not  unnatural.  It  does  not  cast  the  entire  risk  upon  either  of 
the  parties,  but  divides  it  between  them.  If  a  fire  occurs  from 
some  other  cause,  and,  in  consequence  of  the  presence  of  cam- 
phene upon  the  premises,  it  is  aggravated  and  made  more  de- 
structive than  it  otherwise  would  have  been,  the  loss  falls  upon 
the  insurers.  If  a  fire  is  occasioned  by  the  camphene,  and  the 
insurers  are  not  able  to  trace  it  to  that  cause,  the  loss  falls  upon 
them.  It  is  only  in  those  cases  where  the  insurers  are  able  to 
show  that  camphene  was  the  original  cause  of  the  loss,  that  the 
risk  is  assumed  by  the  assured.  I  see  nothing,  either  in  law  or 
m  reason,  against  the  making  of  such  a  contract ;  and  that  is 


314  Insurance  :   Fire,  Life,  Marine.  o.  hi. 

precisely  the  contract  which    these  parties  have  made,  if  we 
interpret  their  language  according  to  its  natural  import. 

Dbnio  and  Clbrkb,  JJ.,  also  dissented. 

Judgment  affirmed. 


New  York  Court  op  Appeals,  1883. 
WmNE  V.  NIAGAKA  FIRE  INS.  CX). 

(91  N.  Y.  186.) 
Forfeitures  are  not  favored. 

Appeal  from  order  of  General  Term  of  Supreme  Court 
entered  upon  an  order  which  affirmed  a  judgment  in  favor  of 
plaintiffs,  entered  upon  a  verdict. 

For  six  or  seven  years  previous  to  July,  1876,  the  defendant, 
the  Niagara  Insurance  Company,  by  "William  H.  Fredenburgh, 
its  agent,  had  insured  the  Eagle  Hotel  property  belonging  to 
plaintiff,  Henry  W.  Winne,  by  a  policy  for  $2,000,  loss,  if  any, 
payable  to  Benjamin  J.  Winne,  mortgagee,  his  co-plaintiff. 

About  the  time  of  the  expiration  of  the  policy,  July,  1876, 
the  defendant,  the  insurance  company,  mailed  Fredenburgh, 
their  agent,  a  paper  which  contained  opposite  Winne's  name 
the  word  "  drop." 

Fredenburgh,  the  agent,  told  plaintiff  that  he  had  got  a 
letter  from  the  company  that  they  wouldn't  carry  as  large  an 
amount  as  $2,000,  and  showed  him  the  paper  or  letter,  explain- 
ing the  meaning  and  contents.  Fredenburgh  then  said  that 
the  Niagara  would  carry  the  policy  for  $1,000,  and  afterwards 
agreed  to  issue  a  policy  for  that  amount,  and  did  write  it ;  but 
before  its  delivery,  and  the  next  day  after  it  was  agreed  to  be 
written,  the  hotel  burned.  Fredenburgh  had  been  accustomed 
to  give  Winne  credit  for  premiums,  and  hold  policies  till  called 
for. 

The  company  refused  to  pay  the  loss  on  the  ground  that 
the  agent  had  no  authority  whatever  to  insure  plaintiff's  hotel 
for  any  amount. 

Andrews,  Ch.  J. — The  jury  found  that  there  was  an  uncon- 
ditional agreement  ou  the  part  of  Fredenburgh  to  reinsure  to 


0.   III.  WiNNK    V.   NlAdAKA    FlKK    Tn8.  Co.  oij 

the  amount  of  $1,000,  and  the  claiui  of  the  (iefendant  that  there 
was  no  completed  contract  of  insurance  rests  upon  the  fact  that 
the  rate  of  pi-emiuni  and  the  (hiration  of  the  risk  were  not 
specified  when  the  agreement  was  made.  There  can  be  no 
doubt  that  these  are  essential  elements  of  a  contract  of  insur- 
ance, and  if  there  was  no  meeting  of  minds  of  the  parties  upon 
these  particulars,  the  contract  of  insurance  was  not  consum- 
mated, and  the  matter  stood  as  a  mere  negotiation,  incom])lete, 
and  imposing  no  obligation  upon  either  party.  The  claim  that 
there  was  no  consensus  of  the  parties  upon  these  points  rests 
upon  the  fact  that  no  words  passed  between  them  in  respect  to 
the  time  or  rate  of  insurance  when  the  alleged  contract  was 
made.  But  this  was  unnecessary,  provided  the  jury  were 
authorized,  from  the  circumstances  of  the  transaction,  to  infer 
that  the  parties  intended  that  the  new  policy  should  be  issued 
for  the  same  time  and  at  the  same  rate  of  premium  as  the  policy 
which  had  just  expired.  There  was  an  express  agreement  as 
to  the  subject-matter  of  the  insurance,  the  parties,  the  risk,  and 
the  amount.  The  negotiation  referred  to  a  new  insurance  for 
$1,000  on  the  same  building  insured  by  the  previous  policy,  and 
in  the  same  company.  In  the  absence  of  negative  words,  it  is 
a  reasonable  inference  that  the  parties  also  understood  that  the 
new  insurance  was  to  be  for  the  same  time  and  at  the  same 
rate  of  premium  as  the  prior  one,  differing  only  in  amount. 
The  policy  prepared  by  the  agent  after  the  negotiation  for  the 
new  policy  specified  the  same  rate  of  premium  as  the  prior  one, 
and  was  for  the  usual  time  of  one  year.  We  think  the  jury 
were  authorized  to  find  that  the  minds  of  the  parties  met  as  to 
all  the  essential  terms  of  the  contract,  and  that  there  was  a 
completed  contract  of  insurance  between  Fredenburgh  and  the 
plaintiff  Henrj^  W.  "Winne. 

The  remaining  question  on  the  merits  arises  upon  the  de- 
fendant's claim  that  Fredenburgh  had  no  authority  to  insure 
the  Eagle  Hotel  property,  and  that  this  was  known  to  Winne 
when  the  alleged  contract  was  made.  It  is  admitted  that 
Fredenburgh  was  the  general  agent  of  the  defendant  at  Kings- 
ton at  the  time  of  the  transaction.  He  was  intrusted  with 
blank  forms  of  policies  of  the  defendant,  signed  by  its  officers, 
and  was  authorized  to  bind  the  company  by  his  contracts  in  the 
first  instance,  the  company  reserving  the  right  to  cancel  policiea 


816  Insukance:    Fike,  Life,  Marine.  o.  hi. 

issued  by  him,  and  terminate  the  risk.  Under  this  general 
authority,  Fredenburgh  had  insured  the  Eagle  Hotel  property 
in  the  defendant's  company  for  several  years,  to  tJje  amount  of 
$2,000,  the  last  policy  for  that  amount  expiring  July  1,  1876. 
The  alleged  limitation  of  his  authority  to  insure  the  Eagle 
Hotel  property  is  contained  in  a  paper  called  an  "  expiration 
sheet,"  sent  by  the  company  to  Fredenburgh,  according  to  its 
usual  custom,  showing  the  policies  ^Yhich  would  expire  during 
the  month  ensuing  that  in  which  it  was  sent,  and  containing 
notations  opposite  each  risk.  The  particular  sheet  now  in 
question  was  sent  in  June,  1876,  and  contained  a  list  of  seven 
policies,  issued  at  his  agency,  which  would  expire  in  July. 
Opposite  the  policy  on  the  Eagle  Hotel  property  was  the  word 
"  drop,"  and  opposite  the  others  the  word  "  renew."  Whether 
this  expiration  sheet  was  seen  by  Winne  before  he  made  the 
agreement  with  Fredenburgh  for  the  policy  now  in  question, 
was  a  subject  of  controversy  on  the  trial.  But  assuming  that 
it  was  exhibited  to  and  read  by  Winne  before  that  time,  so  that 
he  is  chargeable  with  notice  of  its  contents,  we  are  nevertheless 
of  opinion  that  the  language  used  was  not  equivalent  to  an 
absolute  instruction  to  Fredenburgh  not  to  insure  the  Eagle 
Hotel  property  for  any  amount,  and  that  an  insurance  of  the 
property  by  him  for  a  smaller  sura  was  not  prohibited. 

The  evidence  tends  to  show,  and  the  jury  have  found  that 
the  agent  so  interpreted  the  instruction.  The  prior  policy  was 
in  fact  dropped.  The  risk  was  reduced  in  amount.  The  agent 
prepared  the  new  policy,  directed  it  to  be  reported  to  the  com- 
pany, and  it  was  entered  by  the  clerk  in  the  register  of  com- 
pleted contracts.  The  word  "  drop  "  in  the  expiration  sheet, 
to  say  the  least,  was  ambiguous  and  equivocal,  and  the  principle 
applies  that  a  letter  of  instruction  from  a  principal  to  an  agent 
should  be  expressed  in  clear  language,  and  that  if  not  expressed 
in  "  plain  and  unequivocal  terms,  but  the  language  is  fairly 
susceptible  of  different  interpretations,  and  the  agent  in  fact  is 
misled  and  adopts  and  follows  one,  while  the  principal  intended 
another,  then  the  principal  will  be  bound,  and  the  agent  will 
be  exonerated."  Story  on  Agency,  §  74.  See,  also,  Herrinan 
V.  Merchants'  Ins.  Co.,  81  N.  Y.  188;  37  Am.  Rep.  488.  In 
the  absence  of  special  limitation,  the  authority  of  Fredenburgh 
to  make  the  contract  in  question  is  unquestionable.     The  lim:ta- 


0.  III.  WiNNE  V.  Niagara  Fikk  Ins.  Co.  317 

tion  proved,  simply  })i()hil)ited  the  renewal  of  the  existing  risk, 
or  an  equivalent  insurance.  Winne  had  a  right  to  put  this 
interpretation  u[)on  tlie  instruction.  If  the  company  intended 
to  decline  any  insurance  on  the  property,  it  should  have  said  so. 
It  cannot  in  justice  defeat  the  contract  in  question  by  putting 
an  interpretation  upon  its  instructions  at  variance  with  that  of 
its  agent  and  Winne,  and  of  which  the  language  was  clearly 
capable. 

The  remaining  question  is  whether  a  joint  action  lies  in 
favor  of  the  plaintiffs.  The  plaintiff  Henry  W.  "Winne  was  the 
owner  of  the  property  insured,  and  the  plaintiff  Benjamin  J. 
Winne  was  the  mortgagee.  The  policy  contains  the  clause, 
"  loss,  if  any,  payable  to  Benjamin  J.  Winne,  to  the  extent  of 
his  mortgage  interest  therein."  We  think  a  joint  action  is 
proper.  The  plaintiffs  have  a  common  interest  in  enforcing 
the  contract.  The  ])laintiff  Henry  W.  Winne  has  no  adverse 
interest  to  that  of  his  co-plaintiff.  The  fund  is  applicable,  first 
upon  the  mortgage  debt,  and  when  that  is  paid,  the  balance 
belongs  to  the  mortgagor.  It  is,  we  think,  quite  appropriate, 
and  in  accord  with  the  flexible  rule  of  procedure  now  applied 
to  courts  of  justice,  to  allow  persons  situated  as  are  the  plain- 
tiffs to  unite  in  maintaining  the  action,  and  the  practice  is 
sanctioned  by  the  language  of  the  code,  and  of  adjudged  cases. 
Code,  §  466 ;  Boynton  v.  Clinton,  etc.,  Ins.  Co.,  16  Barb.  254 ; 
Ennis  v.  Harinonfij  F.  Ins.  Co.,  3  Bosw.  516 ;  Lasher  v.  N^oi'th- 
western  Ins.  Co.,  18  Hun,  101. 

We  find  no  error  in  the  record,  and  the  judgment  should 
therefore  be  affirmed. 

All  concur. 

Judgment  affirmed. 


CHAPTER   IV. 

GENERAL    PRINCIPLES. 

•  Representations  and  ConcealTnents, 

\  Jnited  States  Supreme  Court,  1886. 

-^         PHCENIX   LIFE   INS.   CO.   v.   RADDIN.* 

(120  U.  S.  183.) 
Representations  ;  concealments. 
Me.  Justice  Gray  delivered  the  opinion  of  the  court. 

This  was  an  action  brought  by  Sewell  Raddin,  and  prose- 
cuted by  his  administrator,  upon  a  policy  of  life  insurance, 
dated  April  25,  1872,  the  material  parts  of  which  were  as 
follows: 

"This  policy  of  insurance  witnesseth,  that  the  Phoenix 
Mutual  Life  Insurance  Companj'^  of  Hartford,  Conn.,  in  consid- 
eration of  the  representations  made  to  them  in  the  apphcation 
for  this  policy,  and  of  the  sum  of,"  etc.,  "  do  assure  the  life  of 
Charles  E.  Raddin,  of  Lynn,  in  the  county  of  Essex,  State  of 
Massachusetts,  in  the  amount  of  ten  thousand  dollars,  for  the 
term  of  his  natural  life." 

"This  policy  is  issued  and  accepted  by  the  assured  upon 
the  following  express  conditions  and  agreements ; "  namely, 
among  others,  that  "  if  any  of  the  declarations  or  statements 
made  in  the  application  for  this  policy,  upon  the  faith  of  which 
this  policy  is  issued,  shall  be  found  in  any  respect  untrue,  this 
policy  shall  be  null  and  void." 

The  application  was  signed  by  Sewell  Raddin,  both  for  his 
son  and  for  himself,  and  contained  twenty-nine  printed  "  ques- 

'  As  to  whether  application  forms  p<art  of  the  contract,  compare  Cushman  y, 
U.  S.  Life  Ins.  Co.,  63  N.  Y.  404, 


o.  IV.  Phosnix   Li  IK   Ins.  Co.  v.  Uaddin.  319 

lions  to  be  answered  by  the  person  whose  hl'c  is  })roposed  to  be 
insured,  and  which  form  the  basis  of  the  contract,"  two  of 
which,  with  the  written  answers  to  them,  and  the  concluding 
paragrapli  of  the  apphcation,  were  as  follows  : 

"  28.  Has  any  application 
been  made  to  this  or  any  other 
company  for  assurance  on  the 
life  of  the  party  ?     If  so,  with 

what   result  ?     What    amounts      $10,000,  Equitable  Life  As 
are  now  assured  on  the  life  of  surance  Society, 
the  party,  and  in  what  compa- 
nies ?    If  already  assured  in  this 
company,  state  the  number  of 
policy. 

"29.  Is  the  party  and  the 
applicant  aware  that  any  un- 
true or  fraudulent  answers  to 
the  above  queries,  or  any  sup- 
pression of  facts  in  regard  to  y 
the  health,  habits,  or  circum- 
stances of  the  party  to  be  as- 
sured, will  vitiate  the  policy, 
and  forfeit  all  payments  there- 
on? 

"  It  is  hereby  declared  that  the  above  are  fair  and  true 
answers  to  the  foregoing  questions,  and  it  is  acknowledged  and 
agreed  by  the  undersigned  that  this  application  shall  form  the 
basis  of  the  contract  for  insurance,  which  contract  shall  be 
completed  only  by  delivery  of  policy,  and  that  any  untrue  or 
fraudulent  answers,  any  suppression  of  facts,"  etc.,  "shall  and 
will  render  the  policy  null  and  void,  and  forfeit  all  payments 
made  thereon." 

It  was  admitted  at  the  trial,  that  Charles  E.  Raddin  died 
July  18,  1881  ;  and  that  at  the  date  of  this  policy  he  had  an 
endowment  policy  in  the  Equitable  Life  Assurance  Society  for 
$10,000,  which  was  afterwards  paid  to  him. 

One  of  the  defenses  relied  on  at  the  trial  was  that  the 
answer  to  question  28  in  the  ap])lication  was  untrue,  and  that 
there  was  a  fraudulent  suppression  of  facts  material  to  the 
insurance,  because  the  plaintiff,  by  his  answer  to  that  question. 


320  Insurajsice  :    Fire,  Life,  Marine.  c.  iv. 

"  $10,000,  Equitable  Life  Assurance  Society,"  intended  to  have 
the  defendant  understand  that  the  only  application  which  had 
been  made  to  any  other  corapan^^  for  assurance  upon  the  life  of 
his  son  was  one  made  to  the  Equitable  Life  Assurance  Society, 
upon  which  that  society  had  issued  a  policy  of  $10,000; 
whereas  in  fact  the  plaintiff,  within  three  weeks  before  the 
application  for  the  policy  in  suit,  had  made  applications  to  that 
society  and  to  the  New  York  Life  Insurance  Company  for 
additional  insurance  upon  the  son's  life,  each  of  which  had 
been  declined. 

The  defendant  offered  to  prove  that  the  two  other  applica- 
tions were  made  and  declined  as  alleged,  and  that  the  facts  as 
to  the  making  and  the  rejection  of  both  those  applications 
were  known  to  the  plaintiff,  and  intentionally  concealed  b}'' 
him,  at  the  time  of  his  application  to  the  defendant ;  and  upon 
these  offers  of  proof  asked  the  court  to  rule.  First,  that  the 
answer  to  question  28  was  untrue,  and  therefore  no  recovery 
could  be  had  on  this  policy  ;  second,  that  there  was  a  suppres- 
sion of  facts  by  the  plaintiff,  and  therefore  he  could  not  re- 
cover; and,  third,  "that  the  answer  to  question  28  must  be 
construed  to  be  an  answer  to  all  the  clauses  of  that  question, 
and  as  such  was  misleading,  and  amounted  to  a  conceahnent 
of  facts  which  the  defendant  was  entitled  to  know  and  the 
plaintiff  was  bound  to  communicate." 

But  the  court  excluded  all  the  evidence  so  offered,  declined 
to  give  any  of  the  rulings  asked  for,  and  ruled  "  that  if  the 
answer  to  one  of  the  interrogatories  of  question  28  was  true, 
there  would  be  no  breach  of  the  warranty  ;  that  the  failure  to 
answer  the  other  interrogatories  of  question  28  was  no  breach 
of  the  contract ;  and  that  if  the  company  took  the  defective 
application,  it  would  be  a  waiver  on  their  part  of  the  answers 
to  the  other  interrogatories  of  that  question." 

The  jury  having  returned  a  verdict  for  the  plaintiff  in  the 
full  amount  of  the  policy,  the  defendant's  exceptions  to  the 
refusal  to  rule  as  requested  and  to  the  rulings  aforesaid  present 
the  principal  question  in  the  case. 

The  rules  of  law  which  govern  the  decision  of  this  question 
are  well  settled,  and  the  only  difficulty  is  in  applying  those 
rules  to  the  facts  before  us. 

Answers  to  questions    propounded  by  the   insurers  in  an 


0.  IV.  Ph(enix  Lifk  Ins.  Co.  v.  Raddin.  321 

application  for  insurance,  unless  they  are  clearly  shown  i)y  the 
form  of  the  contract  to  have  been  intended  by  both  parties  to 
be  warranties,  to  be  strictly  and  literalh^  complied  with,  are  to 
be  construed  as  representations,  as  to  which  substantial  truth  in 
everything  material  to  the  risk  is  all  that  is  required  of  the 
applicant.  Moulor  v.  American  Ins.  Co.,  Ill  U.  S.  335; 
Cam2)hell  v.  IVew  Emjland  Ins.  Co.,  98  Mass.  381  ;  Thomson  v. 
Weems,  9  App.  Cas.  671. 

The  misrepresentation  or  concealment  by  the  assured  of  any 
material  fact  entitles  the  insurers  to  avoid  the  policy.  But  the 
parties  may  by  their  contract  make  material  a  fact  that  would 
otherwise  be  immaterial,  or  inake  immaterial  a  fact  that  would 
otherwise  be  material.  Whether  there  is  other  insurance  on 
the  same  subject,  and  whether  such  insurance  has  been  applied 
for  and  refused,  are  material  facts,  at  least  when  statements 
regarding  them  are  required  by  the  insurers  as  part  of  the 
basis  of  the  contract.  Carpenter  v.  Providence  Washi?}gton 
Ins.  Co.,  16  Pet.  495  ;  Jefries  v.  Life  Lis.  Co.,  22  Wall.  47 ; 
Anderson  v.  Fitzgerald,  4  H.  L.  Cas.  484  ;  Macdonald  v.  Law 
Union  Ins.  Co.,  L.  R.,  9  Q.  B.  328  ;  Edington  v.  ^-Etna  Life 
Lns.  Co.,  77  N.  Y.  564,  and  100  N.  Y.  536. 

Where  an  answer  of  the  applicant  to  a  direct  question  oi 
the  insurers  purports  to  be  a  complete  answer  to  the  question, 
any  substantial  misstatement  or  omission  in  the  answer  avoids 
a  policy  issued  on  the  faith  of  the  application.  Cazenove  v. 
British  Egvitahle  Assurance  Co.,  29  Law  Journal  (N.  S.)  C.  P. 
160,  affirming  S.  C,  6  C.  B.  N.  S.  437.  But  where  upon  the 
face  of  the  application  a  question  appears  to  be  not  answered 
at  all,  or  to  be  imperfectly  answered,  and  the  insurers  issue  a 
policy  without  further  inquiry,  they  waive  the  want  or  imper- 
fection in  the  answer,  and  render  the  omission  to  answer  more 
fully  immaterial.  Connecticut  Ins.  Co.  v.  Luchs,  108  IT.  S. 
498  ;  Hall  v.  People's  Ins.  Co.,  6  Gray,  185 ;  Lorillard  Ins. 
Co.  V.  McCulloch,  21  Ohio  St.  176 ;  American  Ins.  Co.  v.  Ma- 
hone,  56  Mississippi,  180  ;  Carson  v.  Jersey  City  Ins.  Co.,  14 
Yroom,  300,  and  15  Vroom,  210  ;  Lebanon  Lis.  Co.  v.  Kepler^ 
106  Penn.  St.  28. 

The  distinction  between  an  answer    apparently  complete, 
but  in  fact  incomplete  and  therefore  untrue,  and  an  answer 
manifestly  incomplete,  and  as  such  accepted  by  the  insurers, 
21 


322  Insukajmce  :    Fire,  Life,  Marine.  o.  rv. 

may  be  illustrated  by  two  cases  of  fire  insurance,  which  are 
governed  by  the  same  rules  in  this  respect  as  cases  of  life  insur- 
ance. If  one  applying  for  insurance  upon  a  building  against 
fire  is  asked  whether  the  property  is  encumbered,  and  for  what 
amount,  and  in  his  answer  discloses  one  mortgage  when  in 
fact  there  are  two,  the  policy  issued  thereon  is  avoided.  Toione 
V.  Fitchhurg  Ins.  Co.,  7  Allen,  51.  But  if  to  the  same  ques- 
tion he  merely  answers  that  the  property  is  encumbered,  with- 
out stating  the  amount  of  encumbrances,  the  issue  of  the  policy 
without  further  inquiry  is  a  waiver  of  the  omission  to  state 
the  amount.     Nichols  v.  Fayette  Ins.  Co.,  1  Allen,  63. 

In  the  contract  before  us,  the  answers  in  the  application  are 
nowhere  called  warranties,  or  made  part  of  the  contract.  In 
the  policy  those  answers  and  the  concluding  paragraph  of  the 
application  are  referred  to  only  as  "  the  declarations  or  state- 
ments upon  the  faith  of  which  this  policy  is  issued  ; "  and  in 
the  concluding  paragraph  of  the  application  the  answers  are 
declared  to  be  "  fair  and  true  answers  to  the  foregoing  ques- 
tions," and  to  "  form  the  basis  of  the  contract  for  insurance." 
They  must  therefore  be  considered  not  as  warranties  which 
are  part  of  the  contract,  but  as  representations  collateral  to 
the  contract,  and  on  which  it  is  based. 

The  28th  printed  question  in  the  application  consists  of  four 
successive  interrogatories,  as  follows  :  "  Has  any  application 
been  made  to  this  or  any  other  company  for  assurance  on  the 
life  of  the  party?  If  so,  with  what  result?  What  amounts 
are  now  assured  on  the  life  of  the  party,  and  in  what  compa- 
nies? If  already  assured  in  this  company,  state  the  number 
of  policy."  The  only  answer  written  opposite  this  question  is 
"  $10,000,  Equitable  Life  Assurance  Society." 

The  question  being  printed  in  very  small  type,  the  answer 
is  written  in  a  single  line  midway  of  the  opposite  space,  evi- 
dently in  order  to  prevent  the  ends  of  the  letters  from  extend- 
ing above  or  below  that  space ;  and  its  position  with  regard 
to  that  space,  and  to  the  several  interrogatories  combined  in 
the  question,  does  not  appear  to  us  to  have  any  bearing  upon 
the  construction  and  effect  of  the  answer. 

But  the  four  interrogatories  grouped  together  in  one  ques- 
tion, and  all  relating  to  tlie  subject  of  other  insurance,  would 
naturally  be  understood  as  all  tending  to  one  object — the  ascer- 


0.  IV.  Phcenix  Life  Ins.  Co.  v.  Raddin.  323 

taining  of  the  amount  of  such  insurance.  The  answer  in  its 
form  is  responsive,  not  to  the  first  and  second  interrogatories, 
but  to  the  third  interrogatory  only,  and  fully  and  truly  an- 
swers that  interrogatory  by  stating  the  existing  amount  of 
prior  insurance  and  in  what  company,  and  thus  renders  the 
foui'tii  interrogatory  irrelevant.  If  the  insurers,  after  being 
ithus  truly  and  fully  informed  of  the  amount  and  the  place  of 
prior  insurance,  considered  it  material  to  know  whether  any 
unsuccessful  applications  had  been  made  for  additional  insur- 
ance, they  should  either  have  repeated  the  first  two  interrog- 
atories, or  have  put  further  questions.  The  legal  effect  of 
issuing  a  policy  upon  the  answer  as  it  stood  was  to  waive 
their  right  of  requiring  further  answers  as  to  the  particulars 
mentioned  in  the  28th  question,  to  determine  that  it  was 
immaterial,  for  the  purposes  of  their  contract,  whether  any 
unsuccessful  applications  had  been  made,  and  to  estop  them 
to  set  up  the  omission  to  disclose  such  applications  as  a  ground 
for  avoiding  the  policy.  The  insurers,  having  thus  conclu- 
sively elected  to  treat  that  omission  as  immaterial,  could  not 
afterwards  make  it  material  by  proving  that  it  was  intentional. 
The  case  of  London  Assurance  v.  Mansel^  11  Ch.  D.  363,  on 
which  the  insurers  relied  at  the  argument,  did  not  arise  on  a 
question  including  several  interrogatories  as  to  whether  another 
application  had  been  made,  and  with  what  result,  and  the 
amount  of  existing  insurance,  and  in  what  company.  But  the 
application  or  proposal  contained  two  separate  questions — 
the  first,  whether  a  proposal  had  been  made  at  any  other  office, 
and,  if  so,  where ;  the  second,  whether  it  was  accepted  at  the 
ordinary  premium,  or  at  an  increased  premium,  or  declined — 
and  contained  no  third  question  or  interrogatory  as  to  the 
amount  of  existing  insurance,  and  in  what  company.  The  single 
answer  to  both  questions  was,  "  Insured  now  in  two  offices 
for  £16,000  at  ordinary  rates.  Policies  effected  last  year." 
There  being  no  specific  interrogatory  as  to  the  amount  of  ex- 
isting insurance,  that  answer  could  apply  only  to  the  question 
whether  a  proposal  had  been  made,  or  to  the  question  whether 
it  had  been  accepted  and  at  what  rates,  or  declined ;  and  as 
applied  to  either  of  those  questions  it  was  in  fact,  but  not 
upon  its  face,  incomplete  and  therefore  untrue.  As  applied 
to  the  first  question,  it  disclosed  only  some  and  not  all  of  the 


324  Insurance  :   Fire,  Life,  Marine.  o.  iv. 

proposals  which  had  in  fact  been  made ;  and  as  applied 
to  the  second  question,  it  disclosed  only  the  proposals  which 
had  been  accepted,  and  not  those  which  had  been  declined, 
though  the  question  distinctly  embraced  both.  That  case 
is  thus  clearly  distinguished  in  its  facts  from  the  case  at 
bar.  So  much  of  the  remarks  of  Sir  George  Jessel,  M.  R.,  in 
delivering  judgment,  as  implies  that  an  insurance  company  is 
not  bound  to  look  with  the  greatest  attention  at  the  answers 
of  an  applicant  to  the  great  number  of  questions  framed  by  the 
company  or  its  agents,  and  that  the  intentional  omission  of  the 
insured  to  answer  a  question  put  to  him  is  a  concealment  which 
will  avoid  a  policy  issued  without  further  inquiry,  can  hardly 
be  reconciled  with  the  uniform  current  of  American  decisions. 
For  these  reasons,  our  conclusion  upon  this  branch  of  the 
case  is  that  there  was  no  error  of  which  the  company  had  a 
right  to  complain,  either  in  the  refusals  to  rule,  or  in  the  ruHngs 

made. 

Judgment  affirmed. 

Court  of  Queen's  Bench,  1867. 
PROUDFOOT  V.  MONTEFIORE. 

(L.  R.,  2Q.  B.  511.) 
Principal  responsible  for  concealment  of  maferial  facts  by  hit  agent. 

Declaration  against  the  defendant  as  chairman  of  the  Alli- 
ance Assurance  Company,  claiming  damages  from  the  com- 
pany in  respect  of  the  company  not  having  delivered  to  the 
plaintiff  a  policy  of  insurance  on  certain  goods  shipped  on 
board  a  ship  called  the  Atine  Duncan,  pursuant  to  an  agree- 
ment alleged  by  the  plaintiff  to  have  been  entered  into  between 
the  plaintiff  and  the  company,  and  in  respect  of  the  company 
not  having  paid  the  sum  of  money  which  the  plaintiff  alleged 
would  have  become  due  on  such  policy  if  the  same  had  been 
so  delivered. 

The  third  plea  stated,  in  substance,  that  the  alleged  agree- 
ment was  obtained  from  the  company  by  the  wrongful  and 
improper  concealment  by  the  plaintiff  from  the  company  of 
certain  facts  and  information  wliich  the  plaintiff  knew  as  to 
the  ship  having  run  ashore  on  or  about  the  23d  of  January, 


C.  IV,  PeOUDFOOT  v.  MONTEFIORB.  326 

1861,  which  matters  so  concealed  were  unknown  to  the  com- 
pany ;  that  the  matters  which  were  so  wrongfully  and  im- 
properly concealed  were  at  the  time  of  the  making  of  the 
promise  material  to  be  known  to  the  company,  and  material 
to  the  risks  against  which  the  company  made  the  promise  to 
indemnify  the  plaintiff. 

The  cause  was  tried  at  the  Liverpool  summer  assizes,  1861, 
before  Crompton,  J.,  when  a  verdict  was  found  for  the  plain- 
tiff. On  the  27th  of  June,  1862,  a  rule  for  a  new  trial,  ob- 
tained at  the  instance  of  the  defendant,  was  made  absolute. 
The  cause  was  tried  a  second  time  at  the  Liverpool  summer 
assizes,  1863,  before  Mellor,  J.  At  the  second  trial  it  was 
agreed  that  the  case  should  be  left  to  the  jury  on  the  question, 
whether  or  not  the  plaintiff,  before  the  instructions  were  given 
for  the  insurance  and  before  it  was  effected,  had  actual  knowl- 
edge of  the  ship  or  cargo  having  been  lost,  or  of  any  misfor- 
tune having  happened  to,  or  of  anything  being  amiss  with,  the 
ship  or  cargo,  or  of  the  ship  or  cargo  having  sustained  any 
injury.  The  jury  found  for  the  plaintiff.  A  judge's  order  was 
made,  before  the  jury  returned  their  verdict,  that  in  the  event 
of  the  jury  finding  for  the  plaintiff,  the  verdict  should  be  en- 
tered for  the  sura  of  £1,200,  plus  interest  to  the  day  of  signing 
judgment,  less  the  amount  of  the  premium  and  salvage,  and 
subject  to  a  special  case  to  be  stated  from  the  notes  taken  by 
Crompton.  J.,  with  the  addition  of  the  evidence  of  Rees  taken 
by  Mellor,  J.,  and  the  letters  therein  referred  to.  The  court 
were  to  draw  any  inferences  of  fact  they  thought  proper. 

The  judgment  of  the  court  (Cockburn,  C.  J.,  Blackburn  and 
Shee,  J.  J.)  was  delivered  by 

Cockburn,  C.  J. — The  agreement  was  for  insurance  on  a 
cargo  of  madder,  lost  or  not  lost,  shipped  at  Smyrna,  on  a  voy- 
age  from  Smyrna  to  Liverpool,  on  board  the  ship  Anne  Dun- 
can, for  and  on  account  of  the  plaintiff,  and  consigned  to  him 
by  one  T.  B.  Rees,  of  Smyrna. 

The  plaintiff,  a  merchant  at  Manchester  and  Liverpool, 
dealt  largely  in  madders  in  the  Smyrna  market,  and  Rees, 
being  resident  at  Smyrna,  was  employed  by  him  at  a  salary  of 
X800  a  year  to  make  ])urchases  of  madder  on  his  account,  and 
to  ship  and  consign  the  cargoes  to  him.     The  cargo  in  question 


326  Insurance:    Fire,  Life,  Marine.  o.  nr 

was  purchased  and  shipped  by  Rees  in  the  course  of  his  em- 
ployment as  such  agent.  The  ship,  with  the  cargo  on  board, 
sailed  from  Smyrna  on  the  21st  of  January,  1861,  but  again 
brought  up  in  the  Gulf  of  Smyrna  on  the  same  day.  She  set 
sail  a<j-ain  on  the  2-3d,  but  was  stranded  in  the  course  of  that 
day,  and  became  a  wreck.  The  cargo  became  a  total  loss. 
Intelligence  of  the  stranding  of  the  ship  was  communicated  to 
Rees  on  the  morning  of  the  24th.  On  the  26th,  which  was  the 
first  post  day,  he  communicated  by  letter  to  the  plaintiff  the 
loss  ot  the  vessel ;  and  the  fact  that  though  the  cargo  had  been 
got  out,  yet  as  the  vessel  had  had  twelve  feet  of  water  in  the 
hold,  the  greater  part  of  the  cargo  would  be  seriously  damaged. 
Having  communicated  this  information,  the  letter  proceeds 
thus :  "  I  hope  to  goodness  you  are  fully  insured.  On  the  12th 
instant  I  forwarded  you  invoice  and  weights  of  the  shipment  by 
her,  which  gave  you  plenty  of  time  to  effect  insurance.  Lloyd's 
agents  have  telegraphed  the  disaster,  which  will  reach  London 
before  my  letter  of  the  19th  instant,  inclosing  bill  of  lading. 
I  did  not  dare  telegraph  to  you,  for  when  once  you  had  the 
intelligence  in  hand  you  were  prevented  from  insuring."  On 
the  31st  of  January  the  plaintiff,  after  receipt  of  the  letters 
from  Rees  of  the  12th  and  19th  of  January,  but  prior  to  the 
receipt  of  that  of  the  26th,  gave  instructions  to  effect  the  policy, 
and  the  slip  was  signed  on  the  same  day  by  the  company's 
agent  at  Manchester. 

There  was,  therefore,  no  fraud  or  undue  concealment  by 
the  plaintiff  of  a  material  fact  within  his  personal  knowledge. 
On  the  other  hand,  it  is  clear  that  the  fact  of  the  loss  of  the 
vessel  and  damage  to  the  cargo  might  have  been  communicated 
to  him  by  Rees  by  means  of  the  telegraph,  but  was  purposely 
kept  back  by  the  agent  for  the  fraudulent  purpose  of  enabling 
the  plaintiff  to  insure.  We  think  it  clear,  looking  to  the  posi- 
tion of  Rees  as  agent  to  purchase  and  ship  the  cargo  for  the 
plaintiff,  that  it  was  his  duty  to  communicate  to  his  principal 
the  disaster  which  had  happened  to  the  cargo  ;  and,  looking 
to  the  now  general  use  of  the  electric  telegraph  in  matters  of 
mercantile  interest,  between  agents  and  their  employers,  we 
think  it  was  the  duty  of  the  agent  to  communicate  with  his 
employers  by  this  speedier  means  of  communication.  From 
the  letter  of  the  agent  it  appears  that,  but  for  the  fraudulent 


'J.  IT.  PeODDFOOT    V.   MoNTEFIORE.  327 

motive  for  his  silence,  he  would,  in  the  ordinary  course  of  his 
duty,  have  conveyed  the  intelligence  of  the  loss  to  his  em- 
ployer, and  would  have  availed  himself  of  the  telegraph  for 
that  purpose. 

Upon  the  above  facts,  the  question  arises  whether  the  plain- 
tiff, the  assured,  is  so  far  affected  by  the  knowledge  of  his 
agent  of  the  loss  of  the  vessel  and  damage  to  the  cargo  as  that 
the  fraud  thus  committed  on  the  underwriter,  through  the  in- 
tentional concealment  of  the  agent,  though  innocently  com- 
mitted so  far  as  the  plaintiff  is  concerned,  will  afford  a  defense 
to  the  underwriter  on  a  claim  to  enforce  the  policy. 

Two  cases  decided  in  this  court,  one  in  the  time  of  Lord 
Mansfield,  the  other  in  that  of  Lord  Ellenborough,  establish 
the  affirmative  of  this  proposition.  In  the  case  of  Fitzherbert 
V.  Mather,  1  T.  K.  12,  where  an  agent  of  the  assured  was 
employed  to  ship  a  cargo  of  oats,  and  to  communicate  the 
shipment  to  another  agent  who  was  employed  to  effect  an 
assurance,  an  omission  on  the  part  of  the  former,  who  had 
written  to  announce  the  sailing  of  the  ship,  on  the  ship  having 
afterwards  got  on  shore,  to  communicate  that  fact,  which  he 
might  have  done  by  the  same  post,  was  held  fatal  to  the  insur- 
ance. Ashurst,  J.,  observes  :  "  On  general  principles  of  policy, 
the  act  of  the  agent  ought  to  bind  the  principal ;  because  it 
must  be  taken  for  granted  that  the  principal  knows  whatever 
the  agent  knows.  And  there  is  no  hardship  on  the  plaintiff  : 
for  if  the  fact  had  been  known  the  policy  could  not  have  been 
effected."  Buller,  J.,  says  :  "  Though  the  plaintiff  be  innocent, 
yet  if  he  build  his  information  on  that  of  his  agent,  and  his 
agent  be  guilty  of  a  misrepresentation,  the  principal  must  suffer. 
It  is  the  common  question  every  day  at  Guildhall,  when  one  of 
two  innocent  persons  must  suffer  by  the  fraud  or  negligence  of 
a  third,  which  of  the  two  gave  credit.  Here  it  appears  that 
the  plaintiff  trusted  Thomas  (the  agent),  and  he  must  therefore 
take  the  consequences." 

In  the  case  of  Gladstone  v.  King,  1  M.  &  S.  35,  which  was 
an  action  on  a  policy  on  a  ship,  "  lost  or  not  lost,"  the  master 
had  omitted  to  communicate,  when  writing  to  his  owners,  the 
fact  of  the  ship  having  been  driven  on  a  rock,  a  fact  as  to 
which,  on  arriving  at  the  port  of  discharge,  he  made  a  protest, 
detailing  the  accident,  and  stating  that  the  ship's  bottom  must 


328  Insukanok  :   Fike,  Lifk,  Marine.  o.  iv. 

have  been  chafed  ;  and  the  owners,  in  ignorance  of  the  accident, 
had  effected  an  insurance.  On  these  facts  it  was  held  wat  the 
captain  was  bound  to  communicate  the  fact,  and,  for  want  of 
such  communication,  the  antecedent  damage  was  an  implied 
exception  from  the  insurance,  and  the  plaintiffs  could  not  re- 
cover the  loss  arising  from  the  repairs  rendered  necessary  by 
the  accident.  "If,"  says  Lord  EUenborough,  "the  captain 
might  be  permitted  to  wink  at  these  circumstances  without 
hazard  to  the  owners,  the  latter  would  in  all  such  cases  instruct 
their  captain  to  remain  silent  ;  by  which  means  the  under- 
writer at  the  time  of  subscribing  the  policy  would  incur  a 
certainty  of  being  liable  for  an  antecedent  average  loss.  To 
prevent  such  a  consequence,  and  considering  that  what  is 
known  to  the  agent  is  impliedly  known  to  the  principal,  and 
that  the  captain  knew,  and  might  have  actually  communicated 
to  the  plaintiffs,  the  cause  of  damage,  so  as  to  have  apprised 
them  of  it  before  the  time  of  effecting  the  policy,  I  think  that 
no  mischief  will  ensue  from  holding  in  this  case  that  the  ante- 
cedent damage  was  an  implied  exception  out  of  the  policy.  If 
the  principle  be  new,  it  is  consistent  with  justice  and  conven- 
ience ;  and  there  being  no  fraud  imputed  to  the  captain  in  the 
concealment  will  not  alter  the  case." 

An  eminent  authority,  the  late  Mr.  Justice  Story,  has,  how- 
ever, declined  to  be  bound  by  these  decisions.  In  a  case,  Rug- 
ghs  V.  Oeneral  Interest  Ins.  Co.,  4  Mason,  74,  tried  before  him  on  a 
policy  of  insurance  effected  after  a  total  loss,  where  the  master 
had  omitted  to  give  intelligence  of  the  loss  to  his  owner  with 
the  fraudulent  design  of  enabling  him  to  make  an  insurance, 
and  the  insurance  had  been  effected  by  the  owner  in  ignorance 
of  the  loss,  that  learned  judge  held,  that,  as  the  owner  at  the 
time  of  procuring  the  insurance  had  no  knowledge  of  the  loss, 
but  acted  with  an  entire  good  faith,  he  was  not  precluded  from 
recovering,  and  that  the  policy  was  not  rendered  void  b}'  the 
omission  of  the  master  to  communicate  intelligence  of  the  loss, 
although  such  omission  was  willful  and  fraudulent.  The  case 
being  taken  to  a  court  of  error  (12  Wheat.  408),  the  latter  upheld 
the  decision  ;  not,  indeed,  on  the  grounds  taken  by  Mr,  Justice 
Story,  but  on  the  very  unsatisfactory,  and,  as  we  think,  unten- 
able ground,  that  by  the  total  loss  of  the  vessel  the  master  had 
wholly  ceased  to  be  the  agent  of  the  owner,  and  had  become 


0.  IT.  PrOUDFOOT   V.  MoNTEFIORE.  329 

the  agent  of  the  underwriters.  From  the  hinguage  of  the  judg- 
ment it  may  be  inferred  that  if  the  court  had  considered  tliat 
the  relation  of  the  master  to  his  owners  had  not  been  inter- 
rupted by  the  loss  of  the  vessel  they  would  not  have  upheld  the 
decision  appealed  from.  The  ruling  of  Mr.  Justice  Story  has 
been  discussed  by  Mr.  Duer,  in  his  admirable  work  on  insur- 
ance (vol.  ii.  p.  418),  and  we  think  the  reasoning  of  the  learned 
writer  fully  establishes  his  conclusion  as  to  the  ruling  having 
been  erroneous.  Notwithstanding  the  dissent  of  so  eminent  a 
jurist  as  Mr.  Justice  Story,  we  are  of  opinion  that  the  cases  of 
Fitzherhert  v.  Mather  and  Gladstone  v.  King  were  well  decided ; 
and  that  if  an  agent.  Avhose  duty  it  is,  in  the  ordinary  course 
of  business,  to  communicate  information  to  his  principal  as  to 
the  state  of  a  ship  and  cargo,  omits  to  discharge  such  duty, 
and  the  ow^ner,  in  the  absence  of  information  as  to  any  fact 
material  to  be  communicated  to  the  underwriter,  effects  an 
insurance,  such  insurance  will  be  void,  on  the  ground  of  con- 
cealment or  misrepresentation.  The  insurer  is  entitled. to  as 
sume,  as  the  basis  of  the  contract  between  him  and  the  assured, 
that  the  latter  will  communicate  to  him  every  material  fact 
of  which  the  assured  has,  or,  in  the  ordinarj'^  course  of  busi- 
ness, ought  to  have  knowledge  ;  and  that  the  latter  will  take 
the  necessary  measures,  by  the  employment  of  competent  and 
honest  agents,  to  obtain,  through  the  ordinary  channels  of  in- 
telligence in  use  in  the  mercantile  world,  all  due  information 
as  to  the  subject-matter  of  the  insurance.  This  condition  is  not 
complied  with  where,  by  the  fraud  or  negligence  of  the  agent, 
the  party  proposing  the  insurance  is  kept  in  ignorance  of  a 
material  fact  which  ought  to  have  been  made  known  to  the 
underwriter,  and  through  such  ignorance  fails  to  disclose  it. 

It  has  been  said,  indeed,  that  a  part}'  desiring  to  insure  is 
entitled,  on  paying  a  corresponding  premium,  to  insure  on  the 
terms  of  receiving  a  compensation  in  the  event  of  the  subject- 
matter  of  the  insurance  being  lost  at  the  time  of  the  insurance, 
and  that  he  ought  not  to  be  deprived  of  the  advantage,  which 
he  has  paid  to  secure,  by  the  misconduct  of  his  agent.  But 
to  this  there  are  two  answers  :  First,  that,  as  we  have  already 
pointed  out,  the  implied  condition  on  which  the  underwriter  un- 
dertakes to  insure — not  only  that  every  material  fact  which  is, 
but  also  that  every  fact  which  ought  to  be,  in  the  knowledge 


330  Insurance  :    Fire,  Life,  Marine.  o.  iV. 

of  the  assured,  shall  be  made  known  to  hira — is  not  fulfilled ; 
secondly,  as  was  said  by  the  court  in  Fiizherhert  v.  Mather, 
where  a  loss  must  fall  on  one  of  two  innocent  parties  through 
ihe  fraud  or  negligence  of  a  third,  it  ought  to  be  borne  by  the 
party  by  whom  the  person  guilty  of  the  fraud  or  negligence 
has  been  trusted  or  employed. 

By  thus  holding,  we  shall  prevent  the  tendency  to  fraudu- 
lent concealment  on  the  part  of  masters  of  vessels  and  agents  at 
a  distance  in  matters  on  which  they  ought  to  communicate  in- 
formation to  their  principals,  as  also  any  tendency  on  the  part 
of  principals  to  encourage  their  servants  and  agents  so  to  act. 
For  these  reasons  our  judgment  must  be  for  the  defendant. 

Judgment  for  the  defendant. 

House  or  Lords,  1887. 
BLACKBUEN  v.  VIGORS. 

(L.  R.,  12  App.  Gas.  531.) 

Concealment  of  material  facts  by  agents.     What  agents  may  hind  the  principal 
hy  failure  to  disclose  to  insurers  material  facta. 

Appeal  from  the  Court  of  Appeal. 

The  appellants,  Blackburn,  Low  &  Co.,  having  brought  an 
action  against  the  respondent,  Thomas  Vigors,  under  a  policy 
of  reinsurance  subscribed  by  him  for  £50,  claiming  for  a  total 
loss  by  perils  of  the  sea,  the  substantial  defense  was  that  the 
defendant  was  induced  to  subscribe  the  policy  by  the  wrongful 
concealment  by  the  plaintiffs  and  their  agents  of  certain  mate- 
rial facts  known  to  the  plaintiffs  or  their  agents,  and  unknown 
to  the  defendant. 

The  plaintiffs,  underwriters  and  insurance  brokers  at  Glas- 
gow, had  underwritten  the  steamship  State  of  Florida  for 
£1,500,  the  policy  having  been  effected  by  the  usual  brokers 
for  the  ship.  Rose,  Murison  &  Thomson,  who  were  underwriters 
and  insurance  brokers  in  Glasgow.  The  ship  had  left  New  York 
on  the  11th  of  April,  1884,  bound  for  Glasgow,  where  she  was 
due  about  the  24th  or  25th.  On  the  30th  the  plaintiffs  tried  to 
reinsure  through  their  London  brokers,  Roxburgh,  Currie  & 
Co.,  but  the  terms  asked  were  higher  than  the  plaintiffs  would 
give.      On  the  next  day,   May  1,  the  plaintiffs  asked  Rose, 


c.  IV.  Blackburn  v.  Yigors.  331 

Mur-son  &  Thomson  to  effect  a  reinsurance  for  £1,500,  at 
fifteen  guineas,  througli  Rose,  Thomson,  Young  &  Co.,  the 
London  agents  of  Kose,  Murison  &  Thomson.  The  latter 
telegraphed  accordingly  to  Rose,  Thomson,  Young  &  Co. 
After  the  telegram,  and  before  any  answer  came,  Murison,  a 
member  of  the  firm  of  Rose,  Murison  &  Thomson,  became 
aware  of  certain  facts  concerning  the  ship  which  were  material 
to  the  risk,  but  tiiese  facts  were  never  communicated  to  the 
plaintiffs  or  to  Roxburgh,  Currie  &  Co.  After  learning  these 
facts.  Rose,  Murison  &  Thomson  received  the  following  answer 
to  their  telegram :  "  Twenty  guineas  paying  freely,  and  mar- 
ket very  stiff;  likely  to  advance  before  day  is  out."  This 
answer  they  showed  to  the  plaintiffs,  and  then  sent,  in  the 
plaintiffs'  names,  the  following  telegram  to  Rose,  Thomson, 
Young  &  Co.  :  "  Pay  twenty  guineas."  The  answer  to  this 
was  sent  direct  to  the  plaintiffs,  who  ultimately  reinsured  for 
£800,  at  twenty-five  guineas,  through  Rose,  Thomson,  Young 
&  Co.     This  was  not  the  policy  sued  on. 

On  the  2d  of  May  the  plaintiffs,  through  Roxburgh,  Currie 
&  Co.,  effected  a  policy  of  reinsurance  for  £700,  at  thirty 
guineas,  lost  or  not  lost.  This  was  the  policy  sued  on.  The 
ship  had,  in  fact,  been  lost  some  days  before  the  plaintiffs  tried 
to  reinsure.  It  was  admitted  that  the  plaintiffs  and  Roxburgh, 
Currie  &  Co.  acted  in  good  faith  throughout. 

The  jury  having  been  discharged  by  consent.  Day,  J., 
gave  judgment  for  the  plaintiffs  for  the  amount  claimed. 

The  (/ourt  of  Appeal  (Lindley  and  Lopes,  L.  JJ.,  Lord 
Esher,  M.  R.,  dissenting)  reversed  this  decision  and  gave  judg- 
ment for  the  defendant. 

Against  this  judgment  the  plaintiffs  appealed. 

Lord  Halsbury,  L.  C. — My  Lords,  in  this  case  the  plaintiffs 
sue  upon  a  policy  of  marine  insurance,  and  the  only  question 
arises  upon  a  statement  of  defense,  that  the  defendant  was 
induced  to  enter  into  the  contract  by  concealment  of  mate- 
rial facts  by  the  plaintiffs  and  their  agents. 

The  facts  are  not  in  dispute.  Neither  the  plaintiffs  nor  the 
agent  through  whom  the  policy  was  effected  had  any  knowl- 
edge of  the  material  fact,  the  coiicealment  or  non-disclosure  of 
which  is  relied  on  as  vitiating  the  policy  ;  but  an  agent  who 


332  Insukanck:    Fikio,   Lifk,   AiAmiNE.  c.  iV 

did  not  eflFect  the  policy,  at  an  eai'liui'  [)eriod,  received  infor- 
mation, admitted  to  be  material,  while  ho  was  acting  as  agent 
to  effect  an  insurance  for  the  plaintiffs,  which  he  did  not 
communicate. 

So  far  as  I  can  understand  the  judgment  of  the  Court  ol 
Appeal,  it  is  intended  to  lay  down  a  principle  that  would  not, 
I  think,  be  contested,  but  it  applies  that  principle  to  a  state  of 
facts  to  which,  I  think,  it  is  inapplicable.  Lindley,  L.  J.,  says, 
I  think  correctly  :  ''  It  is  a  condition  of  the  contract,  that  there 
is  no  misrepresentation  or  concealment,  either  by  the  assured 
or  by  any  one  who  ought,  as  a  matter  of  business  and  fair  deal- 
ing, to  have  stated  or  disclosed  the  facts  to  him  or  to  the  under- 
writer for  him."  And  Lopes,  L.  J.,  after  stating  the  principle 
upon  which  the  knowledge  of  the  agent  is  the  knowledge  of 
the  principal,  explains  it  to  mean,  that  the  principal  is  to  be  as 
responsible  for  any  knowledge  of  a  material  fact  acquired  by 
his  agent  employed  to  obtain  the  insurance,  as  if  he  had  ac- 
quired it  himself.  To  the  propositions  thus  stated,  I  think  no 
objection  could  be  made  ;  but  it  is  obvious  that  the  words  in 
the  one  judgment  "  agent  employed  to  obtain  the  insurance," 
or  in  the  other  judgment,  the  words  "  the  underwriter,"  import 
that  the  particular  contract  obtained  was,  in  the  language  of 
the  statement  of  defense,  a  policy  which  the  defendant  was  in- 
duced to  subscribe  by  the  wrongful  concealment  by  the  plain- 
tiffs  and  their  agents  of  certain  facts  then  known  to  the 
plaintiffs  or  their  agents,  and  unknown  to  the  defendant,  and 
which  were  material  to  the  risk. 

I  doubt  very  much  whether  the  solution  of  the  controversy 
as  to  what  is  the  true  principle  upon  which  the  contract  of 
insurance  is  avoided  by  concealment  or  misrepresentation, 
whether  by  considering  it  fraudulent  or  as  an  implied  term  of 
the  contract,  helps  one  very  much  in  deciding  the  present  case. 
If  one  were  to  adopt  in  terms  the  language  of  Lord  Ellen- 
borough  in  Gladstone  v.  King,  1  M.  &  S.  35,  I  do  not  think  it 
could  justify  the  judgment  of  the  majority  of  the  Court  of 
Appeal.  In  that  case,  a  policy  lost  or  not  lost  was  effected  on 
the  25th  of  October.  On  the  previous  25th  of  July  the  ship 
had  run  upon  a  rock.  On  the  5th  of  August  the  captain 
wrote  to  his  owners,  the  plaintiffs  ;  they  received  his  letter  on 
the  5th  of  October.     Whatever  may  be  said  of  the  logic  of 


0.  IV.  Blackburn  v.  Vigors.  333 

that  case,  which  acquitted  the  captain  of  all  ill  intention,  but 
decided  upon  tlie  ground  that,  otherwise,  owners  might  direct 
their  captains  to  remain  silent,  and  which,  upon  a  policy  lost 
or  not  lost,  assumes  any  antecedent  damage  to  have  been  an 
implied  exception  out  of  the  policy,  it  does  not  proce<jd  upon 
any  such  ground  as  the  Court  of  Appeal  appear  to  rely  on 
here.  Lord  EUenborough  says:  "  No  mischief  will  ensue"  (a 
somewhat  strange  mode  of  enunciating  a  proposition  of  law) 
"  from  holding  in  this  case  that  the  antecedent  damage  was  an 
implied  exception  out  of  the  policy.  If  the  principle  be  new,  it 
is  consistent  with  justice  and  convenience."  Unfortunately  his 
lordship  does  not  state  what  is  the  principle  which  he  appar- 
ently admits  to  be  new.  I  can  quite  understand,  that,  when  a 
man  comes  for  an  insurance  upon  his  ship,  he  may  be  expected 
to  know"  both  the  then  condition  and  the  history  of  the  ship  he 
seeks  to  insure.  If  he  takes  means  not  to  know,  so  as  to  be 
able  to  make  contracts  of  insurance  without  the  responsibility 
of  knowledge,  this  is  fraud.  But  even  without  fraud,  such  as 
I  think  this  would  be,  the  owner  of  the  ship  cannot  escape 
the  necessity  of  being  acquainted  with  his  ship  and  its  history 
because  he  has  committed  to  others — his  captain,  or  his  gen- 
eral agent  for  the  management  of  his  shipping  business — the 
knowledge  which  the  underwriter  has  a  right  to  assume  the 
owner  possesses  when  he  comes  to  insure  his  ship. 

With  respect  to  agency  so  limited,  I  am  not  disposed  to 
dijffer  with  the  proposition  laid  down  by  Cockburn,  C.  J.,  in 
Proudfoot  V.  Montejiore^  L.  K.,  2  Q.  B.  511.  A  part  of  the 
proposition  is  "  that  the  insurer  is  entitled  to  assume  as  the  basis 
of  the  contract  between  hira  and  the  assured,  that  the  latter  will 
communicate  to  him  every  material  fact  of  which  the  assured 
has,  or  in  the  ordinary  course  of  business  ought  to  have,  knowl- 
edge." I  think  these  last  are  the  cardinal  words,  and  contem- 
plate such  an  agency  as  I  have  described  above.  I  am  unable, 
however,  to  see  that  the  present  case  is  governed  by  any  such 
principle. 

A  broker  is  employed  to  effect  a  particular  insurance. 
While  so  employed  he  receives  material  information  :  he  does 
not  effect  the  insurance,  and  he  does  not  communicate  the 
information.  How  is  it  possible  to  suggest  that  the  assured 
could  rely  upon  the  communication  to  the  principal  of  every 


334  Insukanok  :    Fire,   Life,  Marine.  o.  iv. 

piece  of  information  acquired  by  an  agent  through  whom  the 
assured  has  unsuccessfully  endeavored  to  procure  an  insurance  ? 
I  am  unable  to  accept  the  criticism  by  the  Master  of  the  Rolls 
upon  the  proposition  that  the  knowledge  of  the  agent  is  the 
knowledge  of  the  principal.  When  a  person  is  the  agent  to 
know,  his  knowledge  does  bind  the  principal.  But  in  this  case 
I  think  the  agency  of  the  broker  had  ceased  before  the  policy 
sued  upon  was  effected.  The  principal  himself,  and  the  broker 
through  whom  the  policy  sued  on  was  effected,  were  both  ad- 
mitted to  be  unacquainted  with  any  material  fact  which  was 
not  disclosed.  I  cannot  but  think  that  the  somewhat  vague 
use  of  the  word  "  agent "  leads  to  confusion.  Some  agents  so 
far  represent  the  principal  that  in  all  respects  their  acts  and 
intentions  and  their  knowledge  may  truly  be  said  to  be  the 
acts,  intentions,  and  knowledge  of  the  principal.  Other  agents 
may  have  so  limited  and  narrow  an  authority,  both  in  fact  and 
in  the  common  understanding  of  their  form  of  employment,  that 
it  would  be  quite  inaccurate  to  say  that  such  an  agent's  knowl- 
edge  or  intentions  are  the  knowledge  or  intentions  of  his  prin- 
cipal;  and  whether  his  acts  are  the  acts  of  his  principal  de- 
pends  upon  the  specific  authority  he  has  received. 

In  Fitzhei'hert  v.  Mather,  1  T.  R.  12,  the  consignor  and 
shipper  of  the  goods  insured  was  the  agent  whose  knowledge 
was  in  question.  In  Gladstone  v.  King,  supra,  the  master  of 
the  ship  was  the  agent ;  and  in  Proudfoot  v.  Montefiore,  supra^ 
the  agent  was  the  accepted  representative  of  the  principal,  in 
effect  trading  and  acting  for  him  in  Smyrna,  the  owner  him- 
self carrying  on  business  in  Manchester.  And  though  the 
decision  in  Ruggles  v.  General  Insurance  Co.,  12  Wheat.  408, 
before  the  Supreme  Court  of  the  United  States,  may  not  be 
satisfactory  in  what  they  held,  under  the  circumstances  of  that 
case,  to  be  the  relation  between  the  captain  of  the  ship  and  his 
owners,  the  principle  upon  which  that  case  was  decided  was 
the  supposed  termination  of  the  agency  between  them. 

Where  the  employment  of  the  agent  is  such  that,  in  respect 
of  the  particular  matter  in  question  he  really  does  represent 
the  principal,  the  formula,  that  the  knowledge  of  the  agent  is 
his  knowledge,  is,  I  think,  correct ;  but  it  is  obvious  that  that 
formula  can  only  be  applied  when  the  words  "  agent "  and 
"  principal  "  are  limited  in  their  application. 


c.  IV.  Blackbukn  v.  Vigors.  335 

To  lay  down  as  an  al)stract  proposition  of  law,  that  every 
agent,  no  matter  ho\v  limited  -the  scope  of  his  agency,  would 
bind  every  principal,  even  by  his  acts,  is  obviously  and  upon 
the  face  of  it  absurd  ;  and  yet  it  is  by  the  fallacious  use  of  the 
word  "agent"  that  plausibility  is  given  to  reasoning  which 
requires  the  assumption  of  some  such  proposition. 

What,  then,  is  the  position  of  the  broker  in  this  case,  whose 
knowledge,  though  not  communicated,  is  held  to  be  that  of  the 
principal  ? 

He  certainly  is  not  employed  to  acquire  such  knowledge, 
nor  can  any  insurer  suppose  that  he  has  knowledge  in  the 
ordinary  course  of  employment,  like  the  captain  of  a  ship,  or 
the  owner  himself,  as  to  the  condition  or  history  of  the  ship. 
In  this  particular  case  the  knowledge  was  acquired  not  because 
he  was  the  agent  of  the  assured,  but  from  the  accident  that  he 
was  general  agent  for  another  person.  The  reason  why,  if  he 
had  effected  the  insurance,  his  knowledge,  unless  he  communi- 
cated it,  would  have  been  fatal  to  the  policy,  is  because  his 
agency  was  to  effect  an  insurance,  and  the  authority  to  make 
the  contract  drew  with  it  all  the  necessary  powers  and  respon- 
sibilities which  are  involved  in  such  an  employment ;  but  he 
had  no  general  agency — he  had  no  other  authority  than  the 
authority  to  make  the  particular  contract,  and  his  authority 
ended  before  the  contract  sued  on  was  made.  When  it  was 
made,  no  relation  between  him  and  the  ship-owner  existed 
which  made  or  continued  him  an  agent,  for  whose  knowledge 
his  former  principal  was  responsible.  There  was  no  material 
fact  known  to  any  agent  which  was  not  disclosed  at  the  point 
of  time  at  which  the  contract  was  made ;  there  was  no  one 
possessed  of  knowledge  whose  duty  it  was  to  communicate 
such  knowledge. 

For  these  reasons  I  am  of  opinion  that  the  judgment  of  the 
Court  of  Appeal  should  be  reversed,  and  the  judgment  of 
Day,  J.,  restored ;  and  I  move  your  Lordships  accordingly. 

Lord  Watson. — My  Lords,  this  is  a  case  of  considerable 
nicety;  but  I  have  ultimately  come  to  the  conclusion,  for  the 
reasons  already  stated  by  the  Lord  Chancellor,  that  the  appeal 
ought  to  be  allowed. 

It  is.  m  my  opinion,  a  condition  precedent  of  every  contract 


336  Insukanue:    Fire,  Life,  Marine  o.  iv. 

of  marine  insurance,  that  the  insured  shall  make  a  full  disclos- 
ure of  all  facts  materially  affecting  the  risk  which  are  within 
his  personal  knowledge  at  the  time  when  the  contract  is  made. 
"Where  an  insurance  is  effected  through  the  medium  of  an 
agent,  the  ordinary  rule  of  law  applies ;  and  non-disclosure  of 
material  facts,  known  to  the  agent  only,  will  affect  his  prin- 
cipal, and  give  the  insurer  good  ground  for  avoiding  a  con- 
tract. 

In  the  case  of  insurance  by  a  ship-owner,  it  has  been  decided 
that  he  is  affected  by  the  knowledge  of  a  class  of  agents  other 
than  those  whom  he  employs  to  insure.  In  the  ordinary 
course  of  business,  the  owner  of  a  trading  vessel  employs  a 
master  and  ship-agents,  whose  special  function  is  to  keep  their 
employer  duly  informed  of  all  casualties  encountered  by  his 
ship,  which  would  materially  influence  the  judgment  of  an 
insurer. 

On  that  ground  it  has  been  ruled  that  the  insurer  must  be 
held  to  have  transacted,  in  reliance  upon  the  well-known  usage 
of  the  shipping  trade,  and  that  he  is  consequently  entitled  to 
assume  that  every  circumstance  material  to  the  risk  insured 
has  been  communicated  to  him,  which  ought  in  due  course  to 
have  been  made  known  to  the  ship-owner  before  the  insurance 
was  affected.  Accordingly,  if  a  master  or  ship-agent,  whether 
willfully  or  unintentionally,  fail  in  their  duty  to  their  employer, 
their  suppression  of  a  material  fact  will,  notwithstanding  his 
ignorance  of  the  fact,  vitiate  his  contract. 

I  do  not  think  it  necessary  to  notice  in  detail  the  authorities 
which  bear  on  this  point.  I  desire  to  say,  however,  that  I 
have  diflBculty  in  comprehending  the  principle  upon  which  the 
court  in  Gladstone  v.  King,  siipra,  and  Stribley  v.  Imperial 
Marine  Insurance  Comjjany,  1  Q.  B.  D.  507,  held  that  the  in- 
nocent non-communication  of  a  material  fact  by  an  agent  who 
was  the  alter  ego  of  the  ship-owner  merely  created  an  exception 
from  the  policy.  In  both  these  cases  the  court  appears  to  me 
to  have  undertaken  the  somewhat  perilous  task  of  settling  the 
terms  of  the  contract,  which  the  insurer  would  have  made  for 
himself  if  the  fact  had  been  communicated  to  him. 

In  the  present  case  it  is  sought  to  extend  the  imputed 
knowledge  of  the  insured  to  all  facts  which,  during  the  period 
of  his  employment,  became  known  to  any  agent  other  than  the 


0.  IV.  Blackburn  v.  Vigors.  33Y 

agent  effecting  the  policy  in  question,  who  was  employed  at 
any  time,  successfully  or  unsuccessfully,  to  insure  the  whole  or 
part  of  the  same  risk  with  that  covered  by  the  policy.  This  is 
a  case  of  reinsurance;  but  it  is  obvious  that  the  principle,  if 
admitted,  would  be  equally  ap))licable  to  the  original  contract. 

I  am  of  opinion,  with  your  Lordships,  tiiat  the  responsibility 
of  an  innocent  insured  for  the  non-communication  of  facts 
which  happen  to  be  within  the  private  knowledge  of  persons 
whom  he  merely  employs  to  obtain  an  insurance  upon  a  par- 
ticular risk  ought  not  to  be  carried  bej^ond  tlie  person  who 
actually  makes  the  contract  on  his  behalf.  There  is  no 
authority  whatever  for  enlarging  his  responsibility  beyond  that 
limit,  unless  it  is  to  be  found  in  the  decisions  which  relate  to 
captains  and  ship-agents  ;  and  these  do  not  appear  to  me  to 
have  any  analogy  to  the  case  of  agents  employed  to  effect  a 
policy.  There  is  a  material  difference  in  the  relations  of  these 
two  classes  of  agents  to  their  employer.  The  one  class  is 
spec  alh'  emplo3^ed  for  the  purpose  of  communicating  to  him 
tiie  very  facts  which  the  law  requires  him  to  divulge  to  his 
insurer;  the  other  is  employed,  not  to  procure  or  furnish  infor- 
mation concerning  the  ship,  but  to  effect  an  insurance.  There 
is  also,  as  the  Master  of  the  Rolls  pointed  out,  an  important 
difference  in  the  positions  of  those  two  classes  with  respect  to 
the  insurer.  He  is  entitled  to  contract,  and  does  contract,  on 
the  basis  that  all  material  facts  connected  with  the  vessel  in- 
sured, known  to  the  agent  employed  for  that  purpose,  have 
been  by  him  communicated,  in  due  course,  to  his  principal. 
So,  also,  when  an  agent  to  insure  is  brought  into  contact  with 
an  insurer,  the  latter  transacts  on  the  footing  that  the  agent 
has  disclosed  every  material  circumstance  within  his  personal 
knowledge,  whether  it  be  known  to  his  principal  or  not ;  but 
it  cannot  be  reasonably  suggested  that  the  insurer  relies,  to  any 
extent,  upon  the  private  information  possessed  by  persons  of 
whose  existence  he  presumably  knows  nothing. 

In  the  circumstances  of  this  case  I  have  come  to  the  con- 
clusion, that,  whilst  it  might  be  the  moral  duty  of  Mr.  Murison 
to  communicate  to  the  appellants  the  information  which  he  re- 
ceived on  the  forenoon  of  the  1st  of  May,  1884,  he  was  under 
no  legal  obligation  to  do  so.  There  mav  be  circumstances 
which  impose  upon  agents  in  the  position  of  Mr.  Murison  an 
22 


338  Insukanoe  :    Fikk,  Life,  Marine.  o.  rv. 

express  or  implied  duty  to  communicate  their  own  information 
to  their  principal,  but  nothing  of  that  sort  occurs  here.  I 
must,  in  fairness  to  Mr.  Murison,  say  that  I  can  find  no  warrant 
for  the  inference  of  fact  drawn  by  Lindley,  L.  J.,  that  he  pur- 
posely omitted  to  impart  his  knowledge  to  the  appellants,  in 
order  that  they  might  reinsure  on  more  favorable  terras.  No 
such  imputation  was  made  at  the  trial ;  and,  if  it  had  been 
made,  it  ought  to  have  been  submitted  to  the  jury,  and  their 
verdict  taken  upon  it. 

I  concur  therefore  in  the  judgment  which  has  been  moved. 

Order  appealed  from  reversed 


CHAPTER  V. 

GENERAL   PRIN0IPLB8. 

Warranties. 

House  of   Lords,  1884. 
THOMSON   V.  WEEM8. 

(L.  R.,  9  App.  (as.  671.) 
Warranty  of  temperate  habits. 

Lord  Watson. — This  appeal  raises  two  questions  of  some 
importance :  the  one  of  law,  the  other  of  fact.  The  first  of 
these  involves  the  construction  of  a  pohcy  of  assurance,  bearing 
date  the  25th  of  November,  1881,  effected  by  the  deceased, 
William  Weems,  upon  his  own  life,  with  the  Standard  Com- 
pany, which  is  represented  in  this  action  by  the  appellant. 

On  the  9th  of  November,  1881,  the  deceased  submitted  a 
proposal  to  the  compan}',  which  was  made  the  basis  of  the  con- 
tract of  assurance.  The  seventh  question  in  the  proposal  was 
in  these  terms  :  "  (1)  Are  you  temperate  in  your  habits  ?  (2) 
And  have  you  always  been  strictly  so  ?  "  And  the  reply  made 
to  it  by  the  deceased  was  :  ''  (1)  Temperate  ;  (2)  Yes."  It  was 
set  forth  in  the  proposal,  and  it  was  also  made  a  condition  of 
the  policy,  that  in  the  event  of  the  foregoing  or  any  other 
averments  made  by  the  assured  in  his  proposal  concerning  his 
age,  health,  and  other  particulars  proving  to  be  untrue,  the 
policy  was  to  become  null  and  void,  and  all  sums  paid  by  the 
assured  were  to  be  forfeited. 

Mr.  Weems  died  on  the  29th  of  July,  1882,  and  the  Standard 
Company  declined  to  pay  the  sum  assured,  on  the  ground  that 
various  statements  made  by  the  deceased  in  his  proposal,  in- 
cluding his  answer  to  the  seventh  question,  were,  in  point  of 
fact,  untrue.     The  respondents,  who  had  acquired  right  to  the 


340  Insurance  :    Fire,  Life,  Marine.  o.  iv. 

policy,  thereupon  brought  an  action  for  i-eoovery  of  its  amount, 
which  was  resisted  by  the  appellant  upon  the  same  grounds 
which  had  previously  been  assigned  by  the  company  for  their 
refusal  to  pay.  The  Lord  Ordinary  (Fraser),  after  a  proof  had 
been  given,  gave  decree  for  the  respondents  ;  and  his  judg- 
ment was,  on  a  reclaiming  note,  affirmed  by  three  of  the  learned 
judges  of  the  second  division,  Lord  Rutherfurd  Clark  dissent- 
ing. 

I  entertain  no  doubt  that,  according  to  the  law  of  Scotland, 
the  declaration  of  the  assured'  taken  in  connection  with  the 
policy  itself,  in  his  proposal  to  the  company,  constitutes  an  ex- 
press warranty  that  the  answer  made  by  him  to  the  seventh 
question  was  true.  In  other  words,  it  is  an  express  and  essen- 
tial condition  of  the  contract,  that  the  policy  shall  be  null  and 
void  in  the  event  of  the  averment  by  the  assured  as  to  his 
habits,  implied  in  his  answer  to  that  question,  proving  to  be 
false.  The  doctrine  of  warranty,  as  applied  to  such  stipula- 
tions in  a  contract  of  assurance,  is  the  same  in  the  law  of  Scot- 
land as  in  that  of  England. 

Notwithstanding  that  the  warranty  is  express,  there  still 
remains  for  consideration  what  must  be  held  to  be  the  subject- 
matter  of  the  warranty.  That  is  a  point  to  be  determined  in 
each  case,  according  to  the  just  construction  of  the  question 
and  answer  taken  per  se,  and  without  reference  to  the  warranty 
given.  In  the  present  case,  the  seventh  question  proceeds  from 
the  company,  being  printed  on  a  form  of  proposal  issued  by 
them  for  the  use  of  persons  who  may  be  desirous  of  effecting 
an  assurance.  The  question  must,  in  my  opinion,  be  interpreted 
according  to  the  ordinary  and  natural  meaning  of  the  words 
used,  if  that  meaning  be  plain  and  unequivocal,  and  there  be 
nothing  in  the  context  to  qualify  it.  On  the  other  hand,  if  the 
words  used  are  ambiguous,  they  must  be  construed  contra  pro- 
ferentes,  and  in  favor  of  the  assured.  Foi'  my  own  part,  I  can 
discern  no  ambiguity  in  the  language  of  question  seven.  I 
agree  with  Lord  Rutherfurd  Clark,  that  "  the  import  of  the 
answer  is  precisely  the  same  as  if  the  deceased  had  affirmed  : 
first,  that  he  was  temperate  in  his  habits  ;  and,  secondly,  that 
he  had  always  been  strictly  so."  In  its  plain  and  ordinary 
sense,  that  statement  is  an  averment  of  fact,  and  not  a  mere 
assertion  of  the  opinion  ur  belief  entertained  by  the  assqrea 


0.  IV.  Thomson'   v.  Weems.  841 

with  regard  to  the  fact.  It  then  appears  to  me,  that,  whatever 
may  be  the  import  of  the  word  "  temperate  "  (which  is  a  sepa- 
rate matter),  the  assured  must  be  held  to  have  warranted,  not 
that  the  assertion  was  true  according  to  his  sincere  conviction, 
but  true  in  point  of  fact;  and,  consequently,  that  in  order  to 
establish  a  breach  of  warranty  it  is  not  necessary  for  the  appel- 
lant to  prove  that  the  assertion  was  morally  false. 

In  the  second  division  the  majority  of  the  judges  were  of 
opinion  that  the  answer  in  question  was  a  statement  not  of 
fact,  but  of  the  personal  belief  of  the  assured.  Lord  Young 
(in  whose  opinion  Lord  Craighill  concurred)  referred  to  the 
views  which  were  expressed  b}''  him  (as  Lord  Ordinary)  in  Scot- 
tish Life  Assurance  Co.  v.  Buist,  4  Court  Sess.  Cas.,  4th  series, 
1076.  In  that  case  the  assured  had  given  a  warranty  very 
similar  to  that  with  which  we  have  to  deal,  being  to  the  effect 
that  his  habits  were  sober  and  temperate,  and  had  always  been 
so  ;  and  the  learned  judge  in  reference  to  that  warranty  said  : 
"  I  mean,  however,  to  express  my  opinion  distinctly  to  this 
effect,  that  an  insurance  office  challenging  the  policy  after  the 
death  of  the  assured,  on  the  ground  of  untrue  answers  to  que> 
ries,  and  untrue  declarations  made  by  him  regarding  his  health 
and  habits  of  life,  undertakes  a  heavy  onus,  to  the  discharge  of 
which  it  must  be  strictly  held.  I  do  not  go  the  length  of  say- 
ing that  gross  and  willful  falsehood  must  be  proved.  But,  first, 
the  falsehood  must  be  clear,  and  on  a  subject  which  is,  or  rea- 
sonably may  Be,  material  to  the  risk ;  and  second,  if  not  willful, 
it  must  be  inexcusable  in  this  sense,  that  it  consists  in  a  blam- 
ably  reckless  or  careless  assertion  or  omission  of  which  an  hon- 
est man,  giving  ordinary  attention  to  the  matter  in  hand,  would 
not  have  been  guilty,  and  which,  in  fairness  to  the  office  which 
was  deceived,  cannot  be  treated  or  passed  over  as  immaterial 
or  trifling." 

These  observations  were  not  necessary  to  the  decision  of 
Scottish  Life  Assurance  Compayiy  v.  Buist,  because  the  learned 
judge  held  it  to  be  proved  that  the  statements  warranted  had 
been  made  fraudulently.  But  his  Lordship  adopts  his  dicta  in 
that  case  as  expressing  the  principles  which  ought  to  govern 
the  decision  of  the  present  case ;  and,  consistently  with  these 
principles,  he  treats  the  seventh  question  as  an  "  appeal  to  the 
man  himself  as  to  the  epithets  which  he  would  apply  to  himself 


342  Insurance  :   Fire,  Life,  Marine.  o.  iv. 

with  respect  to  his  habits,"  and  upon  that  footing  he  holds 
that  the  answer  to  it  cannot  be  regarded  as  false.  The  Lord 
Justice  Clerk  seems  to  have  taken  substantially  the  same  view  ; 
inasmuch  as  he  states  that  if  he  "  had  thought  that  the  answers 
given  here  were  not  given  in  good  faith,"  he  would  have 
agreed  with  Lord  Rutherfurd  Clark,  who  was  of  opinion  that 
the  appellant  ought  to  prevail. 

I  am  unable  to  assent  to  the  principles  so  clearly  enunciated 
by  Lord  Young,  in  Scottish  Life  Assurance  Company  v.  Buist. 
When  the  truth  of  a  particular  statement  has  been  made  the 
subject  of  warranty,  no  question  can  arise  as  to  its  materiality 
or  immateriality  to  the  risk,  it  being  the  very  purpose  of  the 
warranty  to  exclude  all  controversy  upon  that  point.  As  the 
Lord  Chancellor  (Cranworth)  said  in  Anderson  v.  Fitzgerald, 
4  H.  L.  503  :  "  Nothing,  therefore,  can  be  more  reasonable 
than  that  the  parties  entering  into  that  contract  should  deter- 
mine for  themselves  what  they  think  to  be  material,  and  if 
they  choose  to  do  so,  and  to  stipulate  that  unless  the  assured 
shall  answer  a  certain  question  accurately,  the  policy  or  con- 
tract which  they  are  entering  into  shall  be  void,  it  is  perfectly 
open  to  them  to  do  so,  and  his  false  answer  will  then  avoid  the 
policy."  It  would,  in  my  opinion,  be  equally  subversive  of  the 
contract,  which  the  parties  make  for  themselves,  to  hold  (as 
Lord  Young  apparently  does)  that  there  can  be  no  breach  of 
such  warranty,  unless  it  is  proved  that  the  answer  of  the 
assured,  being  untrue,  was  made  by  him  either  willfully  and  in 
the  knowledge  of  its  untruth,  or  inexcusably,  in  the  sense  of 
its  having  been  a  blamably  reckless  or  careless  assertion. 

An  ingenious  argument  was  addressed  to  your  Lordships 
by  the  respondent's  counsel,  for  the  purpose  of  showing  that 
the  seventh  question,  from  its  very  nature,  involved  only  matter 
of  opinion  and  not  of  fact,  and  consequently  that  any  reply  to 
it  must  be  treated  as  an  expression  of  opinion,  and  not  as  an 
assertion  of  fact.  It  appeared  to  me  that  their  argument, 
which  turned  upon  a  very  fine-drawn  distinction  between  what 
were  termed  matters  of  pure  fact  and  matters  of  opinion,  had 
really  no  practical  bearing  upon  the  case  before  us.  There 
are  facts  innumerable  which  can  only  be  ascertained  by  the 
test  of  opinion,  but  they  are  not  the  less  facts  in  a  legal,  what- 
ever they  may  be  in  a  metaphysical,  sense.     It  appears  to  me 


0.  V.  Thomson  v.  Weems.  3i3 

to  be  in  vain  to  contend  that  the  character  of  a  man's  habits, 
temperate  or  intemperate,  is  matter  of  opinion  and  not  of  fact. 
The  second  branch  of  the  fourth  question  in  the  proposal  sub- 
mitted by  the  deceased  furnishes  an  apt  illustration  of  that 
which,  in  the  ordinary  sense,  is  a  matter  of  mere  opinion  as 
distinguished  from  matter  of  fact.  It  runs  thus  :  "  Do  you 
consider  yourself  of  a  sound  constitution  ? "  That  is  a  query 
which  obviously  relates,  not  to  the  soundness  of  the  assured's 
constitution,  but  to  his  own  opinion  on  the  subject ;  and  in 
that  respect  it  presents  a  marked  contrast  to  the  terras  of  the 
seventh  question. 

It  was  also  argued  by  the  respondents  that  in  Scotland  it 
has  been  long  settled,  by  decision,  that  such  a  question  as  the 
seventh,  occurring  in  a  proposal  made  by  the  assured,  as  the 
basis  of  a  polic}'^  upon  his  own  life,  is  merely  intended  to 
elicit  the  personal  opinion  or  belief  of  the  assured,  and  that  the 
deceased,  William  Weems,  must  be  presumed  to  have  given 
the  answer,  now  said  to  be  untrue,  in  reliance  on  that  judicial 
interpretation.  It  is  necessary,  therefore,  to  examine  the  two 
authorities  which  were  cited  in  support  of  that  proposition  by 
the  respondents'  counsel. 

The  first  of  these  authorities  is  the  case  of  Hutchison  and 
Others  V.  National  Loan  Fund  Life  Assurance  Company^  7 
Court  Session  Cas..  2d  series,  467,  which  was  decided  by  the 
First  Division  of  the  Court  of  Session,  on  21st  of  February, 
1845.  A  lady  of  the  name  of  Armstrong  had,  in  February, 
1843,  effected  an  assurance  upon  her  own  life  with  the  company, 
and  she  died  in  November  of  the  same  year.  Her  proposal, 
w^hich  was  made  the  basis  of  the  contract  of  assurance,  con- 
tained this  query,  "  Has  the  party  an  habitual  cough,  or  any 
disease  or  symptom  of  disease  ?  "  To  which  the  answer  was 
"  No,"  and  also  a  declaration  "  that  I  am  now  in  good  health, 
and  do  ordinarily  enjoy  good  health."  In  defense  to  an  action 
for  the  amount  of  the  policy,  the  company  alleged  that  the  as- 
sured was,  at  the  date  of  the  insurance,  of  intemperate  habits, 
and  laboring  under  disease  of  the  liver,  which  resulted  in 
dropsy,  of  which  she  died.  The  Lord  Ordinary  reported  the 
case  upon  issues,  to  the  First  Division,  when  the  argument 
turned  upon  the  defendeiV  pleas,  to  the  effect  that  the  policy 
was  void,  by  reason  of  there  having  been  a  breach  of  the  war* 


344  Insurance  :    Fire,  Life,  Marine.  o.  v. 

ranty  that  the  insured  was  in  good  "health,  and  had  no  disease 
or  symptom  of  disease.  What  the  court  held  is  best  explained 
by  their  interlocutor:  "Find  that  whatever  issues  may  be 
granted  for  trying  this  case,  the  proposal  of  Mrs.  Armstrong, 
and  declaration  therein  referred  to,  form  the  basis  of  the  con- 
tract in  the  policy  of  insurance  in  question,  and  import  a  war- 
ranty only  to  the  effect  that  the  declarant  was  and  had  been, 
according:  to  her  own  knowledge  and  reasonable  belief,  free 
from  any  disease  or  symptom  of  disease  material  to  the  risk, 
and  that  they  do  not  import  a  warranty  against  any  latent 
and  imperceptible  disease  that  could  only  be  discovered  by 
post-mortem  examination,  or  from  symptoms  disclosing  them- 
selves at  an  after  period  of  time."  Whatever  may  be  the 
merits  of  that  judgment,  it  is  beyond  question  that  the  main 
reasons  assigned  for  it  by  the  very  learned  judges  who  then 
constituted  the  First  Division,  go  the  full  length  of  affirming 
that  it  would  have  been  pactum  illicitum,  had  the  assured  so 
answered  the  query  as  to  take  upon  herself  the  risk  of  her  be- 
ing affected,  at  the  time  of  entering  into  the  policy,  by  a  latent 
and  deadly  disease,  the  existence  of  which  could  only  be  dis- 
covered by  a  post-mortem  examination.  As  might  have  been  ex- 
pected, the  respondents'  counsel  did  not  attempt  to  vindicate  the 
judgment  by  reference  to  these  reasons,  which  they  were  not 
prepared  to  maintain,  and  preferred  to  rest  it  upon  another  and 
more  reasonable  ground,  which  is  very  clearly  indicated  in  the 
opinion  of  Lord  Fullerton.  His  Lordship  construed  the  answer 
and  declaration  as  together  amounting  to  nothing  more  than  a 
statement  by  the  assured  that  she  was  at  the  time  in  good 
health  ;  and  he  further  held  that  "  good  health,"  in  the  ordi- 
nary sense  of  the  term,  means  "  the  perfect  conscious  enjoy- 
ment of  all  one's  faculties  and  functions,  and  the  conscious  free- 
dom from  any  ailment  affecting  them,  or  any  symptom  of 
ailment." 

The  second  of  these  authorities  is  Ufe  Association  of  Scot- 
land v.  Foster,  11  Court  Sess.  Cas.,  3d  series,  351.  In  that 
case  the  association  brought  an  action  to  reduce  a  policy  which 
had  been  effected  with  them  by  the  deceased,  Mrs.  Mary  Foster, 
upon  her  own  life,  in  respect  of  an  alleged  breach  of  warranty. 
The  proposal  for  assurance  contained  a  declaration  by  the  de- 
oeased  "  that  I  am  al  present  in  good  health,  not  being  afflicted 


0.  V.  Thomson  v.  Weems.  345 

with  any  disorder,  external  or  internal,"  and  an  agreement  by 
her  that  if  any  untrue  statement  were  made  therein,  "  or  in  the 
answers  to  questions  by  the  society's  medical  officer  in  refer- 
ence to  this  proposal,"'  the  assurance  should  be  null  and  void. 
A  number  of  questions  were  put  to  Mrs.  Foster  by  the  medical 
officer.  The  fourth  of  these  was  :  '"Are  you  now  in  your  own 
opinion  in  perfect  health?"  to  which  her  answer  was  "Yes;" 
and  the  sixth  was  in  these  terms :  "  Have  you  had  rheumatism, 
gout,  rupture,  fits,  asthma,  s})itting  of  blood,  disease  of  the 
chest,  or  any  affection  of  the  kidneys  or  urinary  organs?"  to 
which  she  answered,  ''  No."  To  her  questions  and  answers 
there  was  appended  a  declaration  by  the  assured,  setting  forth 
that  the  above  statements  were  "  faithful  and  true."  The 
assured  died  of  rupture,  on  the  30tli  of  November,  1871,  six 
months  and  a  half  after  the  date  of  the  proposal.  A  proof  was 
led,  from  whicli  it  appeared  that,  at  the  time  when  she  made  that 
proposal — and  for  some  months  previously — the  assured  had  a 
small  swelling  on  her  groin,  which  caused  her  no  inconven- 
ience, and  did  not  affect  her  general  health.  That  dwelling,  as 
subsequent  events  showed,  was  due  to  hernia;  but  there  was 
no  reason  whatever  to  suppose  that  the  deceased  knew  that 
she  was  affected  by  hernia,  or  that  the  swelling  in  question  in- 
dicated to  her  the  existence  of  that  disease.  The  First  Division 
of  the  court,  before  whom  the  case  depended,  held  that  there 
had  been  no  breach  of  warrantv,  and  assoilzied  the  defenders. 
It  is  of  importance  to  observe  that  the  pursuers  of  the  reduc- 
tion did  not  plead  the  untruth  of  any  statement  made  by  the 
deceased  in  her  proposal  for  assurance.  The  onl}^  statements 
upon  which  they  relied  as  untrue,  and  therefore  constituting  a 
breach  of  wai-ranty,  were  those  made  by  the  assured  in  reply 
to  the  questions  put  by  their  medical  officer.  Upon  this  point 
the  Lord  President  (Inglis)  says :  "  It  is  not  alleged  by  the 
pursuers  that  there  is  any  untrue  averment  in  the  words  of  the 
declaration  itself.  They  admit  that  Mrs.  Foster  was  within 
the  fair  meaning  of  the  words  '  in  good  health '  and  not 
'afflicted  with  any  disorder,  internal  or  external.'"  The  con- 
troversy between  the  parties  was  therefore  narrowed  to  the 
single  issue — whether  the  assured,  by  her  sixth  repl}'  to  the 
medical  officer,  had  asserted  that  she  was  not  at  the  time 
affected  by  latent  disease,  such  as  rupture,  or  any  of  the  other 


346  Insurance:    Fire,  Life,  Marine.  o.  t. 

diseases  specified  in  his  question.  It  appears  to  me  to  have 
been  rightly  decided  by  the  learned  judges  that  the  assured 
did  not  make  an  assertion  to  that  effect.  The  assured  was,  in 
my  opinion,  entitled  to  assume  that  the  object  of  the  doctor 
who  put  questions  to  her  concerning  her  health,  in  the  course 
of  his  medical  examination,  was  to  elicit  from  her  such  facts  as 
were  within  her  knowledge  for  his  own  information  and  guid- 
ance; and,  to  my  mind,  the  terms  of  the  sixth  query  indicate 
that  it  was  addressed  to  her  for  no  other  purpose.  The  as- 
sured had  already  told  him,  in  reply  to  query  fourth,  that, 
"  in  her  own  opinion,"  she  was,  at  the  time,  "  in  perfect 
health."  That  was  followed  up  by  the  sixth  query,  which  does 
not  ask,  "  Have  you,  at  present,  rheumatism,  gout,  rupture, 
etc.,"  but  "Have  you  had  these  diseases  or  any  of  them?" 
The  query  relates  not  to  present  time,  but  to  the  past ;  and 
whilst  it  can  be  reasonably  construed  as  referring  to  every  form 
of  active  disease  of  which  the  assured  must  have  been  previ- 
ously conscious,  I  think  it  would  be  unreasonable  to  hold  that 
the  querj^was  meant  to  refer  to  antecedent  latent  disease,  of 
which  the  assured  was  unconscious. 

I  am  accordingly  of  opinion  that  Life  Association  of  Scot- 
land V.  Foster  has  really  no  bearing  upon  the  doctrine  in  sup- 
port of  which  it  was  cited.  A  very  different  question  would 
have  arisen  for  decision  in  that  case  if  the  assured  had,  in  the 
proposal  which  she  submitted  as  the  basis  of  assurance,  af- 
firmed that  she  was  not,  "  at  the  time,"  affected  with  hernia. 
As  for  the  case  of  Hutchison  v.  National  Loan  Fund  Life 
Assurance  Company,  it  is  impossible  to  assent  to  the  general 
principles  upon  which  it  was  decided  ;  and,  to  my  mind,  it  is 
not  clear  that  the  decision  could  be  justified  upon  other 
grounds.  But  it  is  unnecessary  to  consider  that  question,  be- 
cause, assuming  these  cases  to  have  the  effect  contended  for, 
they  do  not  appear  to  me  to  give  the  least  support  to  the 
respondents'  case.  Both  these  authorities  relate  to  internal 
disease,  of  the  existence  of  which  the  person  affected  is  uncon- 
scious, and  which  medical  examination  cannot  detect  until  he 
is  in  extremis,  or,  it  may  be,  until  life  is  extinct ;  and  the  only 
point  arising  for  decision  was,  whether  a  particular  query  or 
statement  was  so  expressed  as  to  include  latent  and  unknown,  as 
^ell  as  apparent  and  known,  diseases.     But  intemperate  habits 


0.  V.  Thomson   v.  Wkkmh.  34:7 

are  certainly  not,  in  any  sense,  latent  disease  only  discoverable 
in  a  post-mortem  examination.  Such  habits  may,  in  some 
instances,  be  occult ;  but,  as  a  general  rule,  the  knowledge  of 
them  is  not  confined  to  their  owner :  indeed,  it  may  happen 
that  their  outward  manifestations  are  more  readily  appreciated 
by  bystanders  than  by  the  man  himself.  The  purpose  for 
which  such  a  query  as  the  seventh  question  in  this  case  is  ad- 
dressed to  intending  insurers  is  to  elicit  the  fact  and  not  the 
opinion  of  the  assured  ;  and,  if  he  chooses  to  give  a  satisfactory 
answer,  he  must  take  the  risk  of  its  being  true.  If  his  answer 
is  hesitating  or  unsatisfactory,  the  insurers  are  put  upon  their 
guard,  and  have  the  option  of  declining  the  assurance,  or  seek- 
ing information  from  other  sources,  or  of  charging  a  higher 
premium. 

I  now  come  to  the  second  question  in  this  appeal,  which,  as  I 
have  already  said,  is  a  question  not  of  law  but  of  fact.  Was  the 
late  William  Weems,  on  the  9th  of  November,  1881,  and  had 
he  previously  been,  a  man  of  "  temperate  habits,"  as  he  then 
asserted  ?  If  that  question  must  be  answered  according  to  the 
truth,  and  not  according  to  the  personal  belief  of  the  deceased, 
two  of  the  judges  of  the  Second  Division,  the  Lord  Justice 
Clerk  and  Lord  Rutherfurd  Clark,  were  of  opinion  that  he  was 
not.  It  does  not  clearly  appear  what  view  of  the  evidence 
would  have  been  taken,  upon  that  assumption,  by  Lords  Young 
and  Craighil]  ;  but  I  think  the  Lord  Ordinary  was  prepared  to 
hold,  and  did  hold,  that  the  deceased  was,  in  point  of  fact,  a 
man  of  temperate  habits  within  the  meaning  of  the  seventh 
question.  I  entirely  agree  with  many  of  the  observations 
which  were  made  by  the  Lord  Ordinary  in  regard  to  what 
ought,  for  the  purposes  of  this  case,  to  be  considered  as  consti- 
tuting temperate  habits,  although,  upon  the  evidence  before  us, 
I  am  unable  to  come  to  the  same  conclusion  as  his  Lordship. 
I  am  disposed  to  think  that  the  learned  judge  must  have  at- 
tached undue  weight  to  the  case  of  the  Knicker'boGker  Life 
Assurance  Company  of  New  York  v.  Foley^  15  Otto,  350,  in 
regard  to  the  rubric  of  which  his  Lordship  says  :  "  The  law 
here  stated  is  that  which  the  Lord  Ordinary  adopts,  and  which 
he  has  endeavored  to  apply  in  his  present  judgment."  Now, 
as  I  read  the  rubric  and  report,  there  was  no  law  laid  down  in 
that  case.     An  American  iury  had  found  that  a  man  was  of 


348  Insurance:    Fire,  Life,  Marine.  o.  t. 

temperate  habits,  although  it  had  been  proved  at  the  trial  that 
he  had  an  attack  of  delirium  tremens ;  and  the  court  refused 
to  disturb  the  verdict,  the  main  reason  assigned  for  that  decision 
being  a  statement  occurring  in  some  treatise  on  medical  juris- 
prudence to  the  effect  that,  in  the  case  of  an  intemperate  man. 
delirium  tremens  is  occasioned  by  abstinence  from  drink,  and, 
in  the  case  of  a  temperate  man,  by  indulgence  in  liquor.  Even 
if  it  had  been  laid  down  as  matter  of  law,  I  should  hesitate 
very  much  to  adopt  such  a  standard  as  that.  A  man  suffering 
from  delirium  tremens  occasioned  by  recent  drinking  may  pos- 
sibly be  more  temperate  than  another  man  who  is  similarly 
afflicted  in  consequence  of  his  having  abstained  from  his  usual 
potations  ;  but  I  should  not  like  to  affirm  that  either  of  them 
was,  in  the  ordinar}^  sense  of  the  term,  a  man  of  temperate 
habits.  It  is,  however,  perfectly  clear  that  a  mere  finding  of 
fact  by  a  jury  cannot — although  the  court  may  have  declined 
to  set  it  aside  and  grant  a  new  trial — form  any  precedent  for 
the  guidance  of  a  court  of  law. 

I  believe  it  to  be  useless  to  attempt  a  precise  definition  of 
what  constitutes  "  temperate  habits,"  or  "  temperance,"  in  the 
sense  in  which  these  expressions  are  ordinarily  employed.  Men 
differ  so  much  in  their  capacity  for  imbibing  strong  drinks 
that  quantity  affords  no  test ;  what  one  man  might  take  with- 
out exceeding  the  bounds  of  moderation,  another  could  not 
take  without  committing  excess.  In  judging  of  a  man's  so- 
briet}^  his  position  in  life,  and  the  habits  of  the  class  to  which 
he  belongs,  must,  in  my  opinion,  always  be  taken  into  account, 
because  it  is  the  custom  of  men  engaged  in  certain  lines  of 
business  to  take  what  is  called  refreshment,  without  any  impu- 
tation of  excess,  at  times  \vhen  a  similar  indulgence  on  the 
part  of  men  not  so  engaged,  would  be,  to  say  the  least,  sus- 
picious. But  I  do  not  think  that  the  habits  of  a  particular 
locality  ought  to  be  taken  into  account,  or  that  a  man  who 
would  be  generally  regarded  as  of  intemperate  habits  ought  to 
escape  from  that  imputation  because  he  is  no  worse  than  his 
neighbors.  In  the  present  case  the  evidence  clearly  establishes 
that  the  assured  was  a  most  able  and  estimable  man ;  but  that 
circumstance  is  not  of  much  weight,  because  able  and  estimable 
men  are  not  necessarily  exempt  from  social  failings.  I  shall 
not  dwell  upon  the  details  of  the  proof,  of  the  import  of  which 


c.  V.  Thomson  v.  AVeems.  849 

I  take  very  much  the  same  view  which  is  clearly  and  succinctly 
expressed  in  the  opinion  of  Lord  Rutherfurd  Clark.  It  seems 
to  me  to  be  the  fair  result  of  the  evidence,  that  the  assured 
was  in  the  habit  of  taking  more  drink  than  was  good  for  him ; 
that  he  was  frequently  affected  with  drink  on  occasions  when 
all  except  himself  were  sober;  that  his  indulgence  to  excess 
had  become  so  apparent  that  several  of  his  friends  remon- 
strated with  him  on  the  subject,  and  that,  instead  of  repudi- 
ating the  charge,  he  admitted  it  and  promised  amendment. 
These  facts  appear  to  me  to  be  fully  proved,  and  they  are,  in 
my  opinion,  altogether  inconsistent  with  the  truth  of  the  asser- 
tion that  he  was,  on  the  9th  of  November,  1881,  of  temperate 
habits,  and  had  always  been  so.  I  cannot,  in  considering  this 
part  of  the  case,  leave  out  of  view  the  cause  of  the  assured's 
death,  as  certified  by  the  late  Dr.  Colligan.  The  statement  in 
his  certificate  was  made  by  Dr.  Colligan  in  the  ordinary  course 
of  his  professional  duty,  and  in  compliance  with  statutory 
enactment.  There  is  nothing  to  suggest  that  the  statement 
was  made  dishonestly  or  even  negligently;  and  it  is,  in  my 
opinion,  good  jprima  facie  evidence  of  what  the  medical  attend- 
ant of  the  assured  judged  and  believed  to  be  the  cause  of  his 
death.  Of  course  it  is  not  conclusive  evidence  that  death  was 
due  to  chronic  hepatitis;  it  may  be  rebutted.  But  the  testi- 
mony of  Dr.  Hunter  is  not,  in  my  opinion,  suflBcient  to  displace 
it.  That  gentleman  saw  the  assured  at  Bridge  of  Allan  about 
a  month  before  his  death ;  but  he  did  not  examine  the  assured, 
or  visit  him  professionally,  until  within  a  few  days  of  his  decease, 
after  congestion  of  the  brain  had  set  in.  The  witness  had  not 
the  same  opportunity  of  determining  what  was  the  primary 
disease  as  the  medical  attendant  of  the  patient  who  visited  him 
daily  for  a  fortnight  before  brain  svmptoms  supervened ;  and 
the  facts  certified  by  Dr.  Colligan  are  strongly  corroborated 
by  the  other  evidence  in  the  case. 

Interlocutors  appealed  from  reversed. 


350  Insurance  :   Fire,  Life,  Marine.  o.  ▼. 

New  York  Court  of  Appeals,  1882. 
BURLEIGH  V.   GEBHARD  FIRE  INS.  00. 

(90  N.  Y.  220.) 
Interpretation  of  a  iearranty. 

Action  by  court  without  jury  upon  two  policies  of  insur- 
ance issued  to  plaintiffs.  The  property  insured  was  personal, 
and  its  location  is  described  as  follows :  ''  All  contained  in  their 
frame  storehouse  with  slate  roof,  situate,  detached  at  least  one 
hundred  feet,  on  the  east  side  of  Lake  Champlain,  in  the  town 
of  Shoreham,  Yt." 

The  court  found  from  the  evidence  that  a  little  shanty  oi 
office,  standing  seventy-five  feet  distant  from  the  storehouse 
in  which  the  property  insured  was  situated,  containing  a  small 
quantity  of  gunpowder,  did  not  increase  the  risk  nor  create 
any  additional  exposure  of  the  latter  to  the  fire,  and  refused  to 
find  the  contrary. 

The  court  also  found  and  decided  that  the  words  contained 
in  each  policy,  above  quoted,  did  not  constitute  a  warranty,  on 
the  part  of  the  insured,  that  the  building  was  one  hundred  feet 
from  the  small  shanty  called  an  office ;  that  the  existence  of 
the  small  building  within  seventy-five  feet  of  the  storehouse 
containing  the  property  insured  did  not  in  fact  increase  the 
risk. 

FiNOH,  J. — We  think  the  statement  contained  in  the  poli- 
cies issued  by  the  defendants,  describing  the  building  which 
contained  the  personal  property  insured  as  "  detached  at  least 
one  hundred  feet,"  is  a  warranty.  We  cannot  hold  it  to  be  a 
mere  description  of  the  building  for  the  purpose  of  identifying 
the  personal  property  insured  contained  within  it.  The  phrase 
is  not  adapted  to  any  such  purpose.  It  adds  nothing  to  the 
identity  of  the  storehouse,  already  sufficiently  described  by  its 
ownership  and  situation  on  the  lake.  In  Wall  v.  The  East 
River  Mut.  Ins.  Co.,  7  N.  Y.  370,  the  personal  property  in- 
sured was  described  as  "contained  in  the  brick  building  with 
tin  roof,  occupied  as  a  storehonse,  situated  on  the  northerly  side 
of  and  about  forty-two  feet  distant  from  their  ropewalk  at 
Bush  wick."     The  court  said  that  the  identity  of  the  building 


0.  V,  Burleigh  v.  Gebhard  Fikk  Ins.  Co.  851 

was  distinctly  ascertained  by  other  facts  of  the  description, 
and  that  the  phrase  "  occupied  as  a  storehouse"  related  to  the 
risk  and  could  not  be  otherwise  applied.  The  language  in  the 
policies  before  us,  as  to  the  detached  character  of  the  building, 
applies  fitly  to  the  risk,  and  is  entirely  inappropriate  as  matter 
of  description.  "We  must  hold,  therefore,  what  indeed  was  not 
denied  in  the  dissenting  opinion  at  General  Term  or  on  the 
argument  at  our  bar,  that  the  phrase  in  question  is  not  merely 
descriptive  of  identity,  but  relates  to  the  character  of  the  risk, 
Thus  understood  and  appearing  on  the  face  of  the  policy,  it 
amounts  to  a  warranty.  Alexander  v.  Germanla  Fire  Ins.  Co., 
Q%  N.  Y.  464 ;  Richards  v.  Protection  Ins.  Co.,  30  Me.  273 ; 
Parmelee  v.  Hoffman  Fire  Ins.  Co.,  54  N.  Y.  193.  Such  result 
is,  however,  disputed  upon  the  ground  that  the  language  is 
that  of  the  insurers  and  is  vague  and  void  for  ambiguity.  The 
argument  is  that  to  avoid  a  forfeiture  the  words  used  must  be 
most  strongly  construed  against  the  insurer;  that  the  word 
"  detached  "  will  not  be  defined  so  as  to  destroy  the  contract ; 
that  in  the  sense  of  separate,  or  disengaged  from,  the  policy 
does  not  add  from  what ;  that  it  may  mean  "  detached  at  least 
one  hundred  feet"  from  "  earth,  sea,  or  sky,"  or  from  "  Lake 
Champlain ; "  and  that  if  it  means  from  any  building,  it  must 
be  construed  to  mean  any  building  which  constitutes  an  ex- 
posure and  increases  the  risk,  which  was  not  true  of  the  office 
building,  since  the  trial  judge  found  as  a  fact  that  it  did  not  so 
increase  the  risk.  We  do  not  think  the  language  is  so  vague  or 
ambiguous  as  to  make  the  warranty  void.  The  fair  import  of 
the  words  and  the  intent  of  the  parties  indicated  by  the  terms 
of  their  agreement  must  guide  the  construction.  Higgins  v. 
Phcenix  Mut.  Life  Ins.  Co.,  74  N.  Y.  6.  It  cannot  be  doubted 
that  both  parties  perfectly  understood  the  meaning  of  the  phrase 
to  be  that  the  storehouse  stood  by  itself  as  a  detached  or  sep- 
arate building,  and  apart  from  other  buildings  at  least  a  distance 
of  one  hundred  feet.  The  expression,  although  brief,  is  not 
meaningless,  but  to  the  common  understanding,  and  especially 
in  connection  with  an  insurance  against  fire,  conveys  unmistak- 
ably the  idea  we  have  expressed,  and  must  have  been  so  under- 
stood by  each  of  the  contracting  parties.  If  it  did  not  mean 
that,  it  meant  nothing,  and  what  was  intended  as  a  serious  busi- 
ness transaction  becomes  an  idle  play  with  words.     But  the 


352  Insurance  :    Fire,  Life,  Marine.  o.  v. 

further  contention,  that  the  language  must  be  held  to  mean, 
detached  one  hundred  feet  from  any  other  building  of  such 
character  as  to  constitute  an  exposure  and  increase  the  risk, 
seems  to  us  a  sensible  and  just  construction.  The  brevity  of 
the  language  requires  that  something  be  added  to  complete  and 
elucidate  the  meaning.  The  phrase  may  mean,  detached  one 
hundred  feet  from  any  other  building,  whatever  its  size  or 
character.  This  would  be  a  rigorous  and  severe  interpretation, 
most  favorable  to  the  insurer  and  operating  harshly  upon  the 
insured.  So  construed,  it  would  make  anything  which  could 
be  deemed  a  building,  however  small  or  insignificant,  as  an  ice- 
house, or  privy,  or  open  shed,  within  the  prescribed  distance, 
operate  as  a  breach  of  the  warranty.  If  a  construction  so  lit- 
eral or  severe  is  intended  by  the  insurer,  he  should  at  least  say 
so  by  apt  and  appropriate  language,  and  not  ask  the  courts  to 
supply  it  by  intendment.  If  it  be  granted  that  such  small  and 
insignificant  structures  were  not  meant,  and  should  be  treated 
as  if  they  did  not  exist,  the  question  would  remain,  how  small 
and  how  insignificant  must  they  be  to  be  disregarded,  and  how 
large  and  of  what  character  to  justify  a  conclusion  of  breach 
of  the  warranty,  and  where  and  upon  what  principles  is  the 
line  to  be  drawn  between  buildings  strictly  such,  but  proper  to 
be  disregarded,  and  those  whose  presence  breaks  tht  warranty. 
These  questions  can  be  wisely  answered  in  but  one  way.  The 
test  must  be  whether  the  building  within  the  distance  named 
is  or  is  not  an  exposure  which  increases  the  risk.  One  which 
does  not  can  scarcely  be  supposed  to  come  within  the  warranty, 
unless  such  result  is  indicated  by  explicit  language  which  wiU 
bear  no  other  reasonable  interpretation.  No  such  language  is 
contained  in  these  policies,  and  when  the  courts  are  asked  to 
supply  a  defect  and  complete  an  imperfect  phrase,  they  should 
remember  that  the  necessity  is  the  fault  of  the  insurer,  and 
construe  the  language  in  view  of  the  natural  understanding  of 
the  parties,  and  with  justice  to  both.  Declining  to  hold  the 
phrase  in  the  policy  to  be  meaningless  and  void,  we  are  com- 
pelled to  choose  between  two  constructions ;  the  one  rigorous 
and  hard  and  producing  a  forfeiture,  and  the  other  natural  and 
reasonable  and  supporting  the  obligation.  "We  have  heretofore 
aecided  that  in  such  case  the  latter  construction  is  to  be  pre- 
ferred.    Baley  v.  Homestead  Fire  Ins.  Co.,  80  N.  Y.  21  ;  36 


0.  V.  BuRLEiGir  V.  Gebhard  Fire  Ins.  Co.  353 

Am.  Rep.  570.  We  hold,  therefore,  that  the  warranty  in  this 
ca^e  was  that  no  other  building,  of  such  size  and  character  as 
to  constitute  an  exposure  and  increase  the  risk,  stood  within 
one  hundred  feet  of  the  storehouse. 

Thus  construed,  it  is  apparent  that  the  warranty  was  not 
broken.  The  findings  of  fact,  taken  together,  show  that  the 
only  building  within  the  prescribed  distance  of  one  hundred 
feet  was  the  small  office.  This  was  described  as  being  ten  by 
twelve  feet  on  the  ground,  and  seven  feet  high  ;  a  frame  build- 
ing clapboarded  and  ceiled  inside ;  having  a  chimney,  but  no 
stove  in  it ;  used  sometimes  as  an  office,  and  at  the  time  of  the 
fire  containing  a  quantity  of  gunpowder,  temporarily  stored. 
The  evidence  showed,  or  at  least  tended  to  show,  that  this 
building,  standing  seventy-five  feet  from  the  subject  of  insur- 
ance, was  not  an  exposure  and  did  not  affect  the  risk,  and  the 
trial  court  found  that  fact  substantially,  and  refused  to  find  the 
contrary.  It  follows  that  there  was  no  breach  of  the  warranty, 
and  that  the  General  Term  erred  in  so  deciding  and  in  revers- 
ing the  judgment. 

All  concur,  except  Rapallo,  J.,  dissenting,  and  Miller,  J., 
not  voting. 

Orders  reversed 
88 


CHAPTER  VI. 

GENERAL   PRINCIPLES. 

Waiver  and  Estoppel. 

United  States  Supreme  Court,  1871. 
UNION   MUT.   INS.   CO.  v.  WILKINSON. 

(13  Wall.  222.) 
Nature  of  a  waiver  or  an  estoppel,  and  Jiow  it  may  he  established. 

The  Union  Mutual  Insurance  Company,  of  Maine,  insured 
the  life  of  Mrs.  Malinda  Wilkinson  in  favor  of  her  husband. 
Both  husband  and  wife,  prior  to  the  rebellion,  had  been  slaves, 
and  the  husband  came  to  Keokuk,  Iowa,  from  Missouri.  The 
company  did  business  in  Keokuk  (where  the  application  was 
made  and  the  policy  delivered),  through  an  agent,  one  Ball,  to 
whom  it  furnished  blank  applications.  The  mode  of  doing 
business  appeared  to  have  been  that  the  agent  propounded 
certain  printed  questions,  such  as  are  usual  on  applications  for 
insurance  on  lives,  contained  in  a  form  of  application,  and  took 
down  the  answers ;  and  when  the  application  was  signed  by 
the  applicant,  the  friend  and  physician  forwarded  it  to  the 
company,  and  if  accepted,  the  policy  was  returned  to  this 
agent,  who  delivered  it  and  collected  and  transmitted  the 
premiums. 

On  this  form  of  application  were  the  usual  questions  to  be 
answered  by  the  person  proposing  to  effect  the  assurance ;  and 
by  the  terms  of  the  policy  it  became  void  if  any  of  the  repre- 
sentations made  proved  to  be  untrue. 

Among  the  questions  was  this  one : 

"  Has  the  party  ever  had  any  serious  illness,  local  disease, 
or  personal  injury,'  if  so,  of  what  nature,  and  at  what 
age?" 


o.  VI.  Union  Mut.  Ins.  Co.  v.  Wilkinson.  355 

And  the  question  was  answered  : 

"  No." 

So,  too,  after  an  interrogatory  as  to  whether  the  parents 
were  alive  or  dead — they  being,  in  the  case  of  Mrs.  Wilkinson, 
both  dead — were  the  questions  and  answers : 

''  Question.     Mother's  age,  at  her  death  \ 

"  Aimoer.     40. 

"  Question.     Cause  of  her  death  ? 

^^  An  steer.     Fever." 

Mrs.  Wilkinson  having  died,  and  the  company  refusing  to 
pay  the  sum  insured,  Wilkinson,  the  husband,  brought  suit 
in  the  court  below  to  recover  it.  The  defence  was  that  the 
answers  as  above  given  to  the  questions  put  were  false ;  that 
in  regard  to  the  first  one,  Mrs.  Wilkinson,  in  the  year  1862, 
had  received  a  serious  personal  injury,  and  that  in  regard  to 
the  others,  the  mother  had  not  died  at  the  age  of  40,  but  at  the 
earlier  age  of  23,  and  had  died  not  of  fever  but  of  consumption. 

As  to  the  first  matter,  that  of  the  personal  injury,  the  judge 
(under  a  rule  of  practice  in  the  State  courts  of  Iowa,  adopted 
by  the  Circuit  Court  of  that  district,  and  which  allows  the 
jury  in  addition  to  its  general  verdict  to  find  also  special  ver- 
dicts and  answers  to  interrogatories  put)  required  the  jury  to 
respond  to  certain  interrogatories.  These  and  the  answers  to 
them  were  thus : 

'"'■  Interrogatory.  Did  Malinda  Wilkinson,  in  the  year 
1862,  receive  a  serious  personal  injury,  by  falling  from  a  tree? 

"  Answer.     Yes,  injured ;  not  seriously. 

"  Interrogatory.  Were  the  effects  of  such  fall  temporary, 
and  had  these  effects  wholly  passed  away  without  influencing 
or  affecting  her  subsequent  health  or  length  of  life  prior  to  the 
time  when  the  application  for  insurance  in  this  case  was  taken  ? 

"  Answer.     Yes." 

As  to  the  other  matter,  the  age  at  which  the  mother  died 
and  the  disease  which  caused  her  death,  evidence  having  been 
given  by  the  defendant  tending  to  show  that  she  died  at  a 
much  younger  age  than  forty  years,  and  of  consumption,  the 
plaintiff,  in  avoidance  of  this,  was  permitted  (under  the  defend- 
ants' objection  and  exception)  to  prove  that  the  agent  of  the 
insurance  company,  who  took  down  the  answers  of  the  appli- 
cant and  his  wife  to  all  the  interrogatories,  was  told  by  both 


356  Insurance  :    Fire,  Life,  Marine.  o.  yi. 

of  them  that  they  knew  nothing  about  the  cause  of  the  mother's 
death,  or  of  her  age  at  the  time;  that  the  wife  was  too  young 
to  know  or  remember  an^'^thing  about  it,  and  that  the  husband 
had  never  known  her ;  and  to  prove  that,  there  was  present  at 
the  time  the  agent  was  taking  the  apphcation,  an  old  woman, 
who  said  that  she  liad  knowledge  on  that  subject,  and  that  the 
agent  questioned  her  for  himself,  and  from  what  she  told  him 
he  filled  in  the  answer  which  was  now  alleged  to  be  untrue, 
without  its  truth  being  affirmed  or  assented  to  by  the  plaintiff 
or  the  wife. 

This  the  jury  found  in  their  special  verdict,  as  they  had  the 
other  facts,  and  found  that  the  mother  died  at  tlie  age  of  23  ; 
did  not  die  of  consumption ;  and  that  the  applicant  did  not 
know  when  the  application  was  signed  how  the  answer  to  the 
question  about  the  mother's  age  and  the  cause  of  her  death 
had  been  filled  in. 

In  charging  the  jury,  the  court  said,  on  the  first  branch  of 
the  case — that  relating  to  the  personal  injury — that  if  the  effects 
of  the  fall  were  temporary,  and  had  entirely  passed  away  before 
the  application  was  taken,  and  if  it  did  not  affect  Mrs.  Wilkin- 
son's health  or  shorten  her  life,  then  the  non-disclosure  of  the 
fall  was  no  defense  to  the  action ;  but,  on  the  other  hand,  that 
if  the  effects  of  the  fall  were  not  temporary,  and  remained 
when  the  application  was  taken,  or  if  the  fall  affected  the 
general  health,  or  was  so  serious  that  it  might  affect  the  health 
or  shorten  life,  then  the  non-disclosure  wcmld  defeat  recovery, 
although  the  failure  to  mention  the  fall  was  not  intentional. 

On  the  second  branch — that  relating  to  the  age  of  the 
mother — the  court  said  to  the  jury,  that  if  the  applicant  did 
not  know  at  what  age  her  mother  died,  and  did  not  state  it, 
and  declined  to  state  it,  and  that  her  age  was  inserted  by  the 
agent  upon  statements  made  to  him  by  others  in  answer  to 
inquiries  he  made  of  them,  and  upon  the  strength  of  his  own 
judgment,  based  upon  data  thus  obtained,  it  was  no  defense  to 
the  action  to  show  that  the  agent  was  mistaken,  and  that  the 
mother  died  at  the  age  of  twenty-three  years. 

Verdict  and  judgment  having  gone  for  the  plaintiff,  the 
insurance  company  brought  the  case  here  on  error. 

Mr.  Justice  Miller  delivered  the  opinion  of  the  court. 


o.  VI.  Union  Mut.  In8.  Co.  v.  Wilkinson.  357 

On  the  first  branch  of  the  case  the  court  said  to  the  jury, 
that  if  the  effects  of  the  fall  were  temporary,  and  had  entirely 
passed  away  before  the  application  was  taken,  and  if  it  did  not 
affect  Mrs.  Wilkinson's  health  or  shorten  her  hfe,  then  the 
non-disclosure  of  the  fall  was  no  defense  to  the  action.  On 
the  other  hand,  if  the  effects  of  the  fall  were  not  temporary, 
and  remained  when  the  application  was  taken,  or  if  the  fall 
affected  the  general  health,  or  was  so  serious  that  it  might 
affect  the  health  or  shorten  life,  then  the  non-disclosure  would 
defeat  recovery,  although  the  failure  to  mention  the  fall  was 
not  intentional  or  fraudulent. 

It  is  insisted  by  counsel  for  the  defendant,  that,  if  the  injury 
was  consided  serious  at  the  time,  it  is  one  which  must  be  men- 
tioned in  reply  to  the  interrogatory  ;  and  that  whether  any 
further  inquiry  is  expedient  on  the  subject  of  its  permanent 
influence  on  the  health,  is  for  the  insurer  to  determine  before 
making  insurance.  But  there  are  grave  and  obvious  difficulties 
in  this  construction.  The  accidents  resulting  in  personal  in- 
juries, which  at  the  moment  are  considered  by  the  parties 
serious,  are  so  very  numerous  that  it  would  be  almost  impos- 
sible for  a  person  engaged  in  active  life  to  recall  them  at  the 
age  of  forty  or  fifty  years  ;  and  if  the  failure  to  mention  all 
such  injuries  must  invalidate  the  policy,  very  few  would  be 
sustained  where  thorough  inquiry  is  made  into  the  history  of 
the  party  whose  life  is  the  subject  of  insurance.  There  is, 
besides,  the  question  of  what  is  to  be  considered  a  serious 
injury  at  the  time.  If  the  party  gets  over  the  injury  com- 
pletely, without  leaving  any  ill  consequence,  in  a  few  days,  it 
is  clear  that  the  serious  aspect  of  the  case  was  not  a  true  one. 
Is  it  necessary  to  state  the  injury  and  explain  the  mistake  to 
meet  the  requirements  of  the  policy  ? 

On  the  other  hand,  when  the  question  arises,  as  in  this 
case,  on  a  trial,  the  jury,  and  not  the  insurer,  must  decide 
whether  the  injury  was  serious  or  not.  In  deciding  this,  are 
they  to  reject  the  evidence  of  the  ultimate  effect  of  the  injury 
on  the  party's  health,  longevity,  strength,  and  other  similar 
considerations  ?  This  would  be  to  leave  out  of  view  the  essen- 
tial purjiose  of  the  inquiry,  and  the  very  matters  which  would 
throw  most  light  on  the  nature  of  the  injury,  with  reference 
to  its  influence  on  the  insurable  character  of  the  life  proposed. 


358  Insurance  :    Fire,  Life,   Marine.  o.  vi. 

Looking,  then,  to  the  ])urpose  for  which  the  information 
is  sought  by  the  question,  and  to  the  difficulty  of  answering 
whether  an  injury  was  serious,  in  any  other  manner  than  by 
reference  to  its  permanent  or  temporary  influence  on  the 
health,  strength,  and  longevity  of  the  party,  we  are  of  opinion 
that  the  court  did  not  err  in  the  criterion  by  which  it  directed 
the  jury  to  decide  the  interrogatory  propounded  to  them. 

Passing  then  to  the  second  branch  of  the  case.  The 
defendant  excepted  to  the  introduction  of  the  oral  testimony 
regarding  the  action  of  the  agent,  and  to  the  instructions  of 
the  court  on  that  subject ;  and  assigns  the  ruling  of  the  court 
as  error  on  the  ground  that  it  permitted  the  written  contract 
to  be  contradicted  and  varied  by  parol  testimony. 

The  great  value  of  the  rule  of  evidence  here  invoked  cannot 
be  easily  overestimated.  As  a  means  of  protecting  those  who 
are  honest,  accurate,  and  prudent  in  making  their  contracts, 
against  fraud  and  false  swearing,  against  carelessness  and  inac- 
curacy, by  furnishing  evidence  of  what  was  intended  by  the 
parties,  which  can  always  be  produced  without  fear  of  change  or 
liability  to  misconstruction,  the  rule  merits  the  eulogies  it  has 
received.  But  experience  has  shown  that  in  reference  to  these 
very  matters  the  rule  is  not  perfect.  The  written  instrument 
does  not  always  represent  the  intention  of  both  parties,  and 
sometimes  it  fails  to  do  so  as  to  either;  and  where  this  has 
been  the  result  of  accident,  or  mistake,  or  fraud,  the  principle 
has  been  long  recognized  that  under  proper  circumstances,  and 
in  an  appropriate  proceeding,  the  instrument  may  be  set  aside 
or  reformed,  as  best  suits  the  purposes  of  justice.  A  rule  of 
evidence  adopted  by  the  courts  as  a  protection  against  fraud 
and  false  swearing  would,  as  was  said  in  regard  to  the  analo- 
gous rule  known  as  the  statute  of  frauds,  become  the  instrument 
of  the  very  fraud  it  was  intended  to  prevent,  if  there  did  not 
exist  some  authority  to  correct  the  universality  of  its  applica- 
tion. It  is  upon  this  principle  that  courts  of  equity  proceed 
in  giving  the  relief  just  indicated ;  and  though  the  courts,  in  a 
common  law  action,  may  be  more  circumscribed  in  the  freedom 
with  which  they  inquire  into  the  origin  of  written  agreements, 
such  an  inquiry  is  not  always  forbidden  by  the  mere  fact  that 
the  party's  name  has  been  signed  to  the  writing  offered  in 
evidence  against  him. 


c.  VI.  Union  Mut.  Ins.  Co.  v.  Wilkinson.  359 

In  the  case  before  us  a  paper  is  offered  in  evidence  against 
the  plaintiff  containing  a  representation  concerning  a  matter 
material  to  the  contract  on  which  the  suit  is  brought,  and  it  is 
not  denied  that  he  signed  the  instrument,  and  that  the  repre- 
sentation is  untrue.  But  the  parol  testimony  makes  it  clear 
beyond  a  question,  that  this  party  did  not  intend  to  make  that 
representation  when  he  signed  the  paper,  and  did  not  know  he 
was  doing  so,  and,  in  fact,  had  refused  to  make  any  statement 
on  that  subject.  If  the  Avriting  containing  this  representation 
had  been  prepared  and  signed  by  the  plaintiff  in  his  application 
for  a  policy  of  insurance  on  the  life  of  his  wife,  and  if  the 
representation  complained  of  had  been  inserted  by  himself,  or 
by  some  one  who  was  his  agent  alone  in  the  matter,  and  for- 
warded to  the  principal  office  of  the  defendant  corporation,  and 
acted  upon  as  true,  by  the  officers  of  the  compan}'-,  it  is  easy  to 
see  that  justice  would  authorize  them  to  hold  him  to  the  truth 
of  the  statement,  and  that  as  they  had  no  pp.rt  in  the  mistake 
which  he  made,  or  in  the  making  of  the  instrument  which  did 
not  truly  represent  what  he  intended,  he  should  not,  after  the 
event,  be  permitted  to  show  his  own  mistake  or  carelessness  to 
the  prejudice  of  the  corporation. 

If,  however,  we  suppose  the  party  making  the  insurance  to 
have  been  an  individual,  and  to  have  been  present  when  the 
application  was  signed,  and  soliciting  the  assured  to  make  the 
contract  of  insurance,  and  that  the  insurer  himself  wrote  out 
all  these  representations,  and  was  told  by  the  plaintiff  and  his 
wife  that  they  knew  nothing  at  all  of  this  particular  subject  of 
inquiry,  and  that  they  refused  to  make  any  statement  about  it, 
and  yet  knowing  all  this,  wrote  the  representation  to  suit  him- 
self, it  is  equally  clear  that  for  the  insurer  to  insist  that  the 
policy  is  void  because  it  contains  this  statement,  would  be  an 
act  of  bad  faith  and  of  the  grossest  injustice  and  dishonesty. 
And  the  reason  for  this  is  that  the  representation  was  not  the 
statement  of  the  plaintiff,  and  that  the  defendant  knew  it  was 
not  when  he  made  the  contract ;  and  that  it  was  made  by  the 
defendant,  w^ho  procured  the  plaintiff's  signature  thereto. 

It  is  in  precisely  such  cases  as  this  that  courts  of  law  in 
modern  times  have  introduced  the  doctrine  of  equitable  estop- 
pels, or,  as  it  is  sometimes  called,  estoppels  in  pais.  The 
principle  is  that  where  one  party  has  by  his  representations  or 


360  Insurance  :    Fire,  Life,  Marine.  o.  "Vi. 

his  conduct  induced  the  other  party  to  a  transaction  to  give 
him  an  advantage  which  it  would  be  against  equity  and  good 
conscience  for  him  to  assert,  he  would  not  in  a  court  of  justice 
be  permitted  to  avail  himself  of  that  advantage.  And  although 
the  cases  to  which  this  principle  is  to  be  applied  are  not  as  well 
defined  as  could  be  wished,  the  general  doctrine  is  well  under- 
stood and  is  applied  by  courts  of  law  as  well  as  equity  where 
the  technical  advantage  thus  obtained  is  set  up  and  relied  on 
to  defeat  the  ends  of  justice  or  establish  a  dishonest  claim.  It 
has  been  applied  to  the  precise  class  of  cases  of  the  one  before 
us  in  numerous  well-considered  judgments  by  the  courts  of  this 
country.  Indeed,  the  doctrine  is  so  well  understood  and  so 
often  enforced  that,  if  in  the  transaction  we  are  now  consider- 
ing. Ball,  the  insurance  agent,  who  made  out  the  application, 
had  been  in  fact  the  underwriter  of  the  policy,  no  one  would 
doubt  its  applicability  to  the  present  case.  Yet  the  proposition 
admits  of  as  little  doubt  that  if  Ball  was  the  agent  of  the 
insurance  company,  and  not  of  the  plainti£f,  in  what  he  did  in 
filling  up  the  application,  the  company  must  be  held  to  stand 
just  as  he  would  if  he  were  the  principal. 

Although  the  very  well-considered  brief  of  counsel  for 
plaintiff  in  error  takes  no  issue  on  this  point,  it  is  obvious  that 
the  soundness  of  the  court's  instructions  must  be  tested  mainly 
by  the  answer  to  be  given  to  the  question,  "  Whose  agent  was 
Ball  in  filling  up  the  application  ?" 

This  question  has  been  decided  differently  by  courts  of  the 
highest  respectability  in  cases  precisely  analogous  to  the  present. 
It  is  not  to  be  denied  that  the  application,  logically  considered, 
is  the  work  of  the  assured ;  and  if  left  to  himself,  or  to  such 
assistance  as  he  might  select,  the  person  so  selected  would  be 
his  agent,  and  he  alone  would  be  responsible.  On  the  other 
hand,  it  is  well  known — so  well  that  no  court  would  be  justified 
in  shutting  its  eyes  to  it — that  insurance  companies  organized 
under  the  laws  of  one  State,  and  having  in  that  State  their 
principal  business  office,  send  these  agents  all  over  the  land 
with  directions  to  solicit  and  procure  applications  for  policies, 
furnishing  them  with  printed  arguments  in  favor  of  the  value 
and  necessity  of  life  insurance,  and  of  the  special  advantages 
of  the  corporation  which  the  agent  represents.  They  pay 
these  agents  large  commissions  on  the  premiums  thus  obtained, 


o.  VI.  Union  Mut.  Ins.  Co.  v.  Wilkinson.  361 

and  the  policies  are  delivered  at  their  hands  to  the  assured. 
The  agents  are  stimulated  by  letters  and  instructions  to  activity 
in  procuring  contracts,  and  the  party  who  is  in  this  manner 
induced  to  take  out  a  policy  rarely  sees  or  knows  anything 
about  the  company  or  its  officers  by  whom  it  is  issued,  but 
looks  to  and  relies  upon  tho  agent  who  has  persuaded  him  to 
effect  insurance  as  the  full  and  complete  representative  of  the 
company,  in  all  that  is  said  or  done  in  making  the  contract. 
Has  he  not  a  right  to  so  regard  him  ?  It  is  quite  true  that  the 
reports  of  judicial  decisions  are  filled  with  the  efforts  of  these 
companies,  by  their  counsel,  to  establish. the  doctrine  that  they 
can  do  all  this  and  yet  limit  their  responsibility  for  the  acts  of 
these  agents  to  the  simple  receipt  of  the  premium  and  delivery 
of  the  policy,  the  argument  being  that,  as  to  all  other  acts  of 
the  agent,  he  is  the  agent  of  the  assured.  This  proposition  is 
not  without  support  in  some  of  the  earlier  decisions  on  the 
subject ;  and  at  a  time  when  insurance  companies  waited  for 
parties  to  come  to  them  to  seek  assurance,  or  to  forward  appli- 
cations on  their  own  motion,  the  doctrine  had  a  reasonable 
foundation  to  rest  upon.  But  to  apply  such  a  doctrine  in  its 
full  force  to  the  system  of  selling  policies  through  agents, 
which  we  have  described,  would  be  a  snare  and  a  delusion, 
leading,  as  it  has  done  in  numerous  instances,  to  the  grossest 
frauds,  of  which  the  insurance  corporations  receive  the  benefits, 
and  the  parties  supposing  themselves  insured  are  the  victims. 
The  tendency  of  the  modern  decisions  in  this  country  is  steadily 
in  the  opposite  direction.  The  powers  of  the  agent  Sire,  prifnd 
facie,  co-extensive  with  the  business  intrusted  to  his  care,  and 
will  not  be  narrowed  by  limitations  not  communicated  to  the 
person  with  whom  he  deals.  An  insurance  company,  estab- 
lishing a  local  agency,  must  be  held  responsible  to  the  parties 
with  whom  they  transact  business  for  the  acts  and  declarations 
of  the  agent,  within  the  scope  of  his  employment,  as  if  they 
proceeded  from  the  principal. 

In  the  fifth  edition  of  "American  Leading  Cases,"  after  a 
full  consideration  of  the  authorities,  it  is  said : 

"  By  the  interested  or  officious  zeal  of  the  agents  employed 
by  the  insurance  companies,  in  the  wish  to  outbid  each  other 
and  procure  customers,  they  not  unfrequently  mislead  the  in- 
sured, by  a  false  or  erroneous  statement,  of  what  the  applica- 


302  Insukanoe  :    Fike,  Life,  Marine.  o.  vi. 

tion  should  contain,  or,  taking  the  preparation  of  it  into  their 
own  hands,  procure  his  signature  by  an  assurance  that  it  is 
properly  drawn,  and  will  meet  the  requirements  of  the  policy. 
The  better  opinion  seems  to  be  that,  when  this  course  is  pur- 
sued, the  description  of  the  risk  should,  though  nominally  pro- 
ceeding from  the  insured,  be  regarded  as  the  act  of  the  in- 
surers."    Roioley  v.  Empire  Ins.  Oo.,  36  N.  Y.  550. 

The  modern  decisions  fully  sustain  this  proposition,  and 
they  seem  to  us  founded  in  reason  and  justice,  and  meet  our 
entire  approval.  This  principle  does  not  admit  oral  testimony 
to  vary  or  contradict  that  which  is  in  writing,  but  it  goes  upon 
the  idea  that  the  writing  offered  in  evidence  was  not  the 
instrument  of  the  party  whose  name  is  signed  to  it ;  that  it 
was  procured  under  such  circumstances  by  the  other  side  as 
estops  that  side  from  using  it  or  relying  on  its  contents  ;  not 
that  it  may  be  contradicted  by  oral  testimony,  but  that  it  may 
be  shown  by  such  testimony  that  it  cannot  be  lawfully  used 
against  the  party  whose  name  is  signed  to  it. 

Judgment  affirmed. 

New  York  Court  of  Appeals,  1877. 
TAN  SCHOICK  v.  NIAGARA   FIEE  INS.  CO. 

(68  N.  Y.  434.) 

An  act  of  tlie  company's  agent  in  recognition  of  the  validity  of  the  contract, 
coupled  with  knowledge  of  a  ground  for  forfeiture,  will  amount  to  a  waiver. 

Folger,  J. — This  was  an  action  upon  a  policy  of  fire  insur- 
ance. It  contained  this  condition  :  "  Any  interest  in  property 
insured  not  absolute,  or  that  is  less  than  a  perfect  title,  or  if  a 
building  is  insured  that  is  on  leased  ground,  the  same  must  be 
specifically  represented  to  the  company,  and  expressed  in  this 
policy  in  writing,  otherwise  the  insurance  shall  be  void,"  The 
fact  is,  that  part  of  the  property  described  in  the  policy,  as 
subject  of  the  insurance,  was  a  building  on  leased  ground. 
That  fact  was  not  expressed  in  writing  in  the  policy.  The  de- 
fendant claims  that  thereby  the  insurance  was  void,  and  puts 
itself  thereon  as  a  defense  to  the  action.  It  is  to  be  observed 
of  this  condition,  that  it  is  not  one  of  those  which  are  subse- 
quent to  the  formation  of  the  contract,  a  breach  of  which  may 


0.  VI.  Van  Schoick  v.  Niagara  Fire  Ins.  Co.  363 

occur  after  there  has  been  a  valid  contract  made  and  entered 
into,  and  continued  in  existence  for  a  part  of  its  prescribed 
term.  It  is  a  condition  precedent,  lying  at  the  threshold  of  the 
making  of  the  contract,  and  which,  if  not  then  performed  or 
not  then  obviated,  prevents  the  formation  of  an  enforcible 
contract.  It  is  obvious  that,  this  building  being  on  leased 
ground,  the  very  moment  that  the  policy  passed  from  the  de- 
fendant to  the  plaintiff  the  insurance  on  it  was  void,  if  the  con- 
dition holds.  They  were  concurrent  acts,  the  delivery  of  the 
contract,  and  a  breach  of  this  condition  ;  so  that  at  the  same 
instant  that  the  defendant  said  we  insure  this  building,  at  the 
same  instant  the  condition  was  broken  and  the  insurance  was 
void.  So  that,  if  nothing  is  shown  to  break  the  rigid  effect  of 
this  condition,  there  never  was  any  insurance  by  this  defendant 
upon  that  building.  We  Avould  scarce  expect  two  parties  to  go 
through  so  senseless  and  trifling  an  act,  if  the  facts  were  known 
to  each  at  the  time  ;  but  would  rather  conclude  that  they  had 
by  words  or  act  agreed  that  the  condition  should  not  be  con- 
sidered as  binding.  "  If  these  defendants  were  an  entity,  and 
could  have  stood  near  to  that  building  when  the  oral  negotia- 
tion for  insurance  was  made  and  completed,  and  have  seen " 
and  known  that  it  was  upon  leased  ground,  "  could  it  fairly  be 
contended  that  they  would  have  offered  to  the  plaintiff,  or  that 
he  would  knowingly  have  received,  as  the  correctly  written 
evidence  of  the  contract,  this  policy,  with  the  condition  in 
question  contained  in  it  as  an  operative  and  binding  clause? 
We  cannot  suppose  that  either  plaintiff  or  defendant  would  do 
the  utterly  absurd  thing  of  making,  with  deliberation  and 
knowledge,  a  contract  that  was  void  from  inception,  and  was 
in  contradiction  of  the  facts  and  statements  of  the  negotiation." 
It  is  plain  that  the  plaintiff  and  the  agent  meant  to  contract 
and  did  contract  for  the  insurance  of  that  building  as  a  build- 
ing on  leased  land.  Cone  v.  Niag.  Fire  Ins.  Co..,  60  N.  Y.  619. 
Hence  we  are  not  surprised  that  the  plaintiff  claims  that  the 
fact  that  the  building  was  on  leased  ground  was  made  known 
to  the  defendant  when  the  policy  was  applied  for ;  and  that 
the  policy  was  delivered  and  the  premium  accepted  by  them 
without  insisting  upon  the  fact  and  the  condition.  He  makes 
that  action  of  the  company,  with  that  knowledge,  his  reply  to 
their  defense  based  on  that  condition  and  its  breach. 


364  Insurance  :    Fike,  Life,  Marine.  6.  vi. 

We  must  first  inquire  whether  the  plaintiff  is  right  as  to  the 
fact  of  the  prior  knowledge  of  the  defendant  that  the  building 
was  upon  leased  ground.  It  is  shown  that  at  a  time  previous 
to  the  issuing  of  this  policy  the  facts  in  relation  to  the  title  of 
the  property,  just  as  they  were  (that  the  land  was  owned  by 
one  person  and  the  building  by  another,  and  the  contract  be- 
tween them),  were  told  to  one  Lewis,  an  insurance  agent.  This 
Lewis,  Avhen  the  policy  in  suit  was  issued,  having  this  inforimi- 
tion,  and  with  a  view  to  this  insurance,  asked  if  there  was  any 
change  in  the  property,  and  was  told  that  there  was  not.  So 
that,  at  the  time  of  the  issuing  of  this  policy,  Lewis  was  in- 
formed of  the  fact  that  this  building  was  within  the  scope  of 
this  condition.  It  is  now  to  learn  if  Lewis  was  the  agent,  or 
substantially  so,  of  the  defendant.  It  is  shown  that  one  Doo- 
little  was  the  commissioned  and  ostensible  agent  of  the  defend- 
ant, but  that  Lewis  and  he  were  in  partnership  in  the  business 
of  soliciting  and  procuring  insurance ;  that  Lewis  did  with 
assent  of  Doolittle  so  act  as  to  this  defendant ;  that  such  action 
was  known  to  defendant  and  not  disapproved  of  by  it ;  that 
a  joint  commission  had  for  some  time  been  promised  by  the 
defendant  to  those  two  as  its  agents,  which  was  delayed,  but 
finally  issued  before  the  delivery  of  this  policy.  Bodine  v. 
Exchange  Fire  Ins.  Co.,  51  I^.  Y.  117.  We  think  that  the  facts 
bring  the  case  within  that  decision.  So  that,  as  the  informa- 
tion of  the  agent  is  the  information  of  his  principal,  the  de- 
fendant, when  it  accepted  this  risk,  had  information  that  this 
building  stood  upon  leased  ground.  Besides  that,  in  stating 
these  facts  as  they  appeared  to  hira  on  the  motion  of  the  de- 
fendant that  the  court  direct  a  verdict  for  it,  the  learned  judge 
who  held  the  circuit  assumed  or  found  that  Lewis  had  the  rela- 
tions of  an  agent  to  the  defendant.  No  objection  was  made 
by  the  defendant  to  this,  nor  any  request  to  go  to  the  jury  upon 
it  as  a  question  of  fact.  So  it  must  be  taken  as  a  conceded  fact 
in  the  case.     Tallman  v.  Atlantic  Ins.  Co.,  3  Keyes,  87. 

And  so  again  comes  up  the  oft-recurring  and  still  vexed 
question  between  insurance  companies  and  their  policy-holders 
— whether  a  fact,  thoroughly  well  known  and  comprehended  by 
both  sides  to  the  contract  before  it  is  delivered,  may,  by  force 
of  some  condition,  crouched  unseen  in  the  jungle  of  printed 
matter  with  which  a  modern  policy  is  overgrown,  make  a  de- 


c.  VI.  Yan  Sohoick  v.  Niagara  Ft  be  Ins.  Co.  365 

fense  for  the  company,  after  tlie  catastrophe  and  damage  has 
hap[)ened  against  which  it  professes  to  guard.  It  is  to  bo  con- 
fessed that  the  decisions  in  this  State  do  not,  upon  a  cursory- 
perusal  at  least,  seem  strictly  in  harmony  in  regard  to  it. 
There  are  cases  which  hold  that  where  an  application  is  made  a 
part  of  the  policy  by  the  terms  of  it,  and  some  false  assertion 
has  been  inserted  in  the  application  by  the  agent,  when  the 
truth  has  been  at  the  same  time  well  known  to  him,  that  the  in- 
sured shall  not  be  prejudiced  thereby  ;  Roioley  v.  The  Einpire 
Ins.  Co.,  3  Keyes,  557  ;  Plumh  v.  Catt.  Im.  Co.,  18  N.  Y.  392 ; 
Ames  V.  N.  Y.  Ins.  Co.,  14  N.  Y,  253.  There  are  others  where 
the  fact  feU  within  the  condemnation  of  some  condition  of  the 
policy ;  yet  as  the  fact,  as  it  existed,  was  known  to  the  com- 
pan}'',  it  was  held  to  be  estopped  from  setting  up  the  condition 
against  a  recovery;  14  N.  Y.,  supra  ^  Bidwell  v.  N.  W.  Ins. 
Co.,  24  id.  302;  Bodine  v.  Exchange  Ins.  Co.,  51  id.  117. 
There  are  others  in  which  there  was  a  suit  in  equity,  seeking 
a  reformation  of  the  contract,  and  it  was  held  that  the  facts 
showed  unmistakably  that  the  parties  never  meant  to  enter  into 
a  contract  wnth  such  a  condition  or  description  in  it  as  was  set 
up  against  a  recovery;  Cone  v.  Niagara  Ins.  Co.,  60  N.  Y.  619; 
Maher  v.  R'lbernia  Ins.  Co.,  67  id.  283.  In  the  latter  case,  the 
facts  made  a  clear  estoppel  in  pais  against  the  company.  It 
has  also  been  held  that  a  warranty,  part  of  the  printed  matter 
of  the  policy,  has  been  dispensed  with  by  the  oral  agreement  of 
the  parties  made  before  the  delivery  of  the  policy  ;  McCall  v. 
Sun  Mut.  Ins.  Co.,  ^^  N.  Y.  505.  On  the  other  hand,  in  an 
action  at  law  it  has  been  held,  that,  where  the  terms  of  the  pol- 
icy are  clear  and  unambiguous,  parol  proof  is  inadmissible  to 
vary  them,  or  to  show  that  either  or  both  parties  were  not 
aware  that  they  were  exchanging  a  contract  such  as  was  re- 
quested, and  as  agreed  with  the  facts  in  the  situation  of  the 
property.  Pindar  v.  Resolute  Ins.  Co.,  47  N.  Y.  114 ;  see 
also  Rohrhack  v.  Germania  Ins.  Co.,  62  id.  47.  And  so  it  has 
been  held  that  parol  proof  is  not  admissible  to  show  that  both 
parties  knew  that  a  statement  in  an  application  for  a  policy  was 
not  true;  Ripley  v.  JEtna  Ins.  Co.,  30  N.  Y.  136.  Other  cases 
bearing  upon  the  subject  might  be  cited — quantum  suff. 

There  is  no  doubt  but  that,  ordinarily  considered,  this  con- 
dition in  the  policy  was  a  warranty  that  the  building  did  not 


366  Insurance:    Fire,   Life,  Marine.  o.  vi. 

stand  upon  leased  land,  and  that  the  truth  of  that  warranty 
became  a  condition  precedent  to  any  liability  on  the  part  of 
the  defendant.  Yet  there  is  no  doubt,  too,  that  a  condition  in 
a  policy  may  be  waived  by  the  insurer,  or,  as  some  cases  put  it, 
he  be  estopped  from  setting  it  up,  and  that  such  result  may  be 
worked  by  parol,  or  by  act  Avithout  words.  It  has  been  held 
over  and  over,  that  the  customary  clause  in  a  policy,  that  it 
will  not  be  binding  upon  the  insurer  until  the  premium  is  paid 
in  fact,  may  be  waived  by  parol  or  by  act,  and  the  policy  may 
be  delivered  and  become  a  binding  contract  upon  the  insurer 
without  payment  in  hand  of  the  premium  ;  Trustees,  etc.,  v.  Br. 
Ins.  Company,  19  N.  Y.  305  ;  Sheldon  v.  Atlantic  Fire  Ins.  Co., 
26  id.  460;  Wood  v.  Po.  Ins.  Co.,  32  id.  619;  Boehen  v. 
Wms.  B.  City  Ins.  Co.,  35  id.  131  ;  Bodine  v.  Ins.  Co.,  51  id. 
117.  As  to  other  waivers,  see  Ludwig  v.  Jersey  City  Insurance 
Company,  48  N.  Y.  384,  and  cases  there  cited  ;  Shearman  v. 
Niagara  Fire  Insurance  Company,  46  id.  532.  Now,  in  this 
first  class  of  cases,  it  has  been  thought  that  the  fact  that  the 
insurer  delivered  to  the  insured  the  written  contract  as  the 
consummated  agreement  between  them,  and  did  not  then  exact 
present  payment  of  the  premium  as  a  necessary  precedent  to 
delivery,  was  too  plainly  in  contradiction  with  the  condition  for 
prepayment  for  it  to  be  supposed  that  it  was  meant  by  the  in- 
surer or  supposed  by  either  party  that  it  was  intended  to  make 
that  condition  a  potent  part  of  the  contract.  Such  a  provision, 
it  is  said,  could  have  no  effect  upon  the  delivered  and  perfect 
contract  in  which  it  was  contained  ;  19  N.  Y.,  supra.  It 
would  be  imputing  a  fraudulent  intent  to  the  defendant  in  this 
case,  to  say  or  to  think  that  they  did  not  mean,  when  they 
delivered  this  policy  to  the  plaintiff,  to  give  him  a  valid  and 
binding  contract  of  insurance,  or  that  they  did  not  mean  that 
he  should  believe  that  he  had  one,  or  that  they  did  not  suppose 
that  he  did  so  believe.  And  such  imputation  can  be  avoided 
only  by  supposing  that  it  had  overlooked  this  condition,  and  so 
forgotten  to  express  the  fact  as  to  the  building,  in  writing, 
upon  the  policy ;  or  that  it  waived  the  condition,  or  held  itself 
estopped  from  setting  it  up.  The  condition  of  prepayment  of 
premium  is,  like  this  under  consideration,  one  at  the  threshold 
of  the  making  of  the  contract,  and,  if  it  is  not  observed,  no 
valid  contract  is  made  unless  it  is  stepped  over  or  thrust  aside. 


c.  VI.  Yan  Schoick  v.  Niagara  Fire  Ins.  Co.  367 

It  is  consistent  with  fair  dealing  and  a  freedom  from  fraudu- 
lent purpose  to  hold  that  one  or  the  other  was  done  ;  that  is, 
that  there  was  waiver,  or  an  estoppel. 

There  are  other  conditions  precedent  which  may  be  waived. 
Thus  in  Myers  v.  Life  Insurance  Company^  27  Penn.  St.  268, 
it  is  said  that  the  countersigning  by  the  agents  is  under  some 
circumstances  not  essential,  though  required  by  condition. 
The  ground  there  stated  is,  that,  on  an  equitable  interpretation 
of  the  whole  contract,  it  may  become  the  duty  of  the  court  to 
dispense  with  a  portion  of  the  forms  of  the  contract,  if  it  can 
find  any  reliable  substitute  for  them,  on  the  principle  that 
cures  defective  execution  of  powers  where  the  intention  to 
execute  is  sufficiently  plain.  The  contract  was  to  be  complete 
when  delivered  by  the  agents,  and  countersigning  b}''  them  was 
to  be  the  appointed  evidence  of  its  proper  delivery.  There 
ma}"  be  other  evidence,  to  be  regarded  as  equivalent.  So  here 
it  was  not  that  the  defendant  would  not  at  all  insure  a  build- 
ing on  leased  lands.  They  did  agree  to  take  a  risk  upon  it. 
But,  to  have  it  insured  by  them,  the  fact  of  it  being  on  leased 
land  must  be  expressed  to  them.  This  was  done.  As  evidence 
that  it  was  done,  it  must,  they  said  in  the  policy  afterwards 
delivered,  appear  in  writing  on  the  polic3\  This  is,  like  coun- 
tersigning by  agent,  but  one  of  the  forms  of  making  the  con- 
tract. That  the  policy  was  delivered,  and  the  premium 
received,  with  full  purpose  of  insuring  that  building,  with  full 
purpose  of  making  a  valid  and  obligatory  contract,  is  evidence 
that  through  neglect  or  forgetfulness  one  of  the  forms  was  not 
observed,  or  that  it  was  waived  by  the  parties. 

This  case  is  to  be  distinguished  from  that  of  Pindar,  47 
N.  Y.  114.  There  Pindar  asked  a  policy  in  a  certain  form  of 
words.  The  insurer  issued  it  to  him  in  a  different  form,  and 
in  such  form  as  would  not  cover  certain  classes  of  goods,  and 
as,  by  the  presence  of  those  classes  in  the  store,  rendered  the 
whole  policy  void.  It  was  not  proposed  to  show  that  the 
insurer  knew  that  the  very  class  of  goods  on  which  insurance 
was  sought  was  in  the  store,  and  that  the  policy  was  delivered 
with  the  purpose  to  insure  that  class,  and  with  the  mutual 
understanding  that  by  the  policy  it  was  insured.  Hence,  that 
case  differs  from  this,  and  it  was  properly  held  that  Pindar 
was   bound  by  his  contract.     In  RohrhacK's  Case,  supra^  the 


368  Insurance:    Fire,  Life,  Marine.  o.  n. 

decision  wont  upon  the  effect  of  a  peculiar  clause  in  the  policy, 
and  in  that  fact  is  quite  different  from  this.  Chase  v.  Hamil- 
ton Insurance  Company^  20  N.  Y.  52,  is  put  upon  a  ground 
very  like  that  in  liohrhaclis  Case:  that  it  was  printed  in  the 
application,  that  the  company  would  not  be  bound  by  knowl- 
edge of  the  agent,  and  that  the  company  could  not  be  held 
thereby,  unless  there  was  fraud,  or  prevention  of  the  applica- 
tion from  making  a  true  statement.  Ripley  v.  The  JEtna  In- 
surance Company^  30  N.  Y.  136,  is  to  be  distinguished  from 
this  in  hand.  There  the  representation  or  warranty  was  prom- 
issory. It  was  an  agreement  by  the  applicant  that  he  would 
thereafter  keep  a  watchman  in  his  mill  of  nights.  This  looked 
to  the  future  conduct  on  his  part.  It  was  not  a  part  of  the 
form  of  the  contract.  And  though  the  agent  of  the  insurer 
knew  the  custom  of  the  applicant  had  not  been  to  keep  a 
watchman  in  his  mill  from  midnight  on  the  last  day  of  the 
week  till  midnight  of  the  first  day  of  the  next  week,  that 
did  not  affect  his  promise  thereafter  to  do  differently. 

It  is  diflBcult  to  make  all  the  cases  upon  this  subject  har- 
monize ;  but,  by  the  force  of  authority,  we  are  constrained  to 
hold,  that  such  a  condition  as  this  may  be  waived  by  the 
insurer,  by  express  words  to  that  effect,  or  by  acts  done  under 
such  circumstances  as  would  otherwise  impute  a  fraudulent 
purpose,  and  as  will  estop  him  from  setting  up  the  condition 
against  the  insured. 

We,  therefore,  conclude  that  the  judgment  appealed  from 
should  be  affirmed. 

Church,  Ch.  J.,  Andrews  and  Miller,  JJ.,  concur;  Allen, 
Rapallo,  and  Earl,  JJ.,  dissent. 

Judgment  affirmed. 


0.  VI.  Dewees  v.  Manhattan  Ins.  Co.  369 

New  Jersey  Court  of  Errors  and  Appeals,  1872. 
DEWEES   V.  MANHATTAN  INS.  CO. 

(6  Vroom,  366.) 

The  opposing  view  ;  namely,  that  the  terms  of  the  policy  cannot  be  disturbed  by 
parol  testimony  of  what  occurred  at  or  prior  to  its  inception. 

Assumpsit  on  a  policy  of  insurance. 

Beasley,  Chief  Justice. — The  contract  between  these  liti- 
gants, on  the  point  which  I  shall  discuss,  is  clear  and  unambig- 
uous. The  defendants  agreed  to  insure  a  building  occupied  as 
a  country  store,  and  the  stock  of  goods,  consisting  of  the  usual 
variety  of  a  country  store.  This,  by  the  plain  meaning  of  the 
terms  employed,  is  a  warranty  on  the  part  of  the  insured  that 
the  building  was  used,  at  the  date  of  the  agreement,  for  the 
purpose  specified.  It  was  a  representation,  on  the  face  of  the 
policy,  touching  the  premises  in  question,  and  which  aiBFected 
the  risk  ;  and  such  a  representation,  according  to  all  the  author- 
ities, amounts  to  a  warranty.  Formal  words  are  not  necessary 
for  the  creation  of  an  obligation  of  this  character,  and,  in  fact, 
it  usually  arises  from  words  of  description  which  limit  the  risk 
contained  in  the  written  contract.  For  example,  in  a  marine 
insurance,  the  words  "  to  sail  on  such  a  day,"  or  "  in  port,"  or 
"all  well  on  such  a  day,"  are  plain  warranties,  demanding  a 
literal  fulfillment,  and  are  quite  as  efficacious  as  would  be  a 
formal  clause  framed  to  effect  the  same  purpose.  Referring  to 
a  fire  insurance,  the  court  in  Wood  v.  The  Hartford  Fire  Ins. 
Co.,  13  Conn.  533,  says  any  statement  or  description,  on  the 
part  of  the  insured,  on  the  face  of  the  policy,  which  relates  to 
the  risk,  is  an  express  warranty,  and  such  a  warranty,  being  a 
condition  precedent,  must  be  strictly  complied  with,  or  the  in- 
surance is  void.  The  same  doctrine  is  maintained  by  the  Court 
of  Appeals  of  New  York,  in  the  case  of  Wall  w  The  East  River 
Mutual  Insurance  Company,  3  Seld.  370,  the  policy  in  that 
instance  being  declared  void  on  the  ground  that  the  building 
was  described  as  being  "  occupied  as  a  storehouse,"  and  it  ap- 
peared it  was  used  also  for  another  purpose.  The  cases  are 
numerous  and  decisive  upon  the  subject — so  much  so  that  it 
does  not  appear  to  me  to  be  necessary  to  refer  to  them  in  de- 
24 


370  Insurance:    Fire,  Life,  Marine.  o.  vi 

tail,  as,  in  my  opinion,  the  character  of  a  representation  of  this 
kind  is  apparent  upon  its  face.  It  can  be  intended  for  no 
other  purpose  than  to  characterize  the  use  of  the  building  at 
the  date  of  the  insurance  ;  for,  unless  this  is  done,  there  can  be 
no  restriction  on  the  use  of  the  property  by  the  insured  dur- 
ing the  running  of  the  risk.  Unless  this  description  has  the 
force  thus  attributed  to  it,  the  premises  could  have  been  used 
for  any  of  the  most  hazardous  purposes.  A  building  described 
in  a  policy  as  a  ''dwelling-house"  could,  except  for  the  rule 
above  stated,  be  converted  into  a  mill  or  factory.  I  think  it  is 
incontestably  clear  that  the  description  of  the  use  of  the  prem- 
ises in  this  case  was  meant  to  define  the  character  of  the  risk  to 
be  assumed  by  the  defendants. 

But,  besides  this,  it  is  plain  that  the  written  contract  was 
violated  in  a  fatal  particular  by  the  assured.  By  the  express 
terms  of  one  of  the  stipulations  of  the  insurance,  it  is  declared 
that,  if  the  premises  should  be  used  "  for  the  purpose  of  carry- 
ing on  therein  any  trade  or  vocation,  or  for  storing  or  keeping 
therein  any  articles,  goods,  or  merchandise  denominated  hazard- 
ous, or  extra  hazardous,  or  specially  hazardous,  in  the  second 
class  of  the  classes  of  hazards  annexed  to  this  policy,  etc.,  from 
thenceforth,  so  long  as  the  same  shall  be  so  used,  etc.,  the  policy 
shall  be  of  no  force  or  effect."  Among  the  extra-hazardous 
risks,  that  of  keeping  a  "  private  stable  "  is  enumerated ;  and  it 
was  shown  on  the  trial,  and  was  not  denied,  that  at  the  date  of 
the  policy,  and  at  the  time  of  the  fire,  a  part  of  the  building 
insured  was  applied  by  the  plaintiff  to  this  use. 

It  cannot  be  denied,  then,  that  if  we  take  into  view  these 
conditions  of  the  case  alone;  the  plaintiff's  action  must  fall  to 
the  ground.  He  did  an  act  which,  by  force  of  his  written 
agreement,  had  the  effect  to  suspend,  temporarily,  his  insurance. 
As  this  fact,  having  this  destructive  effect,  could  not  be  dis- 
puted, it  became  necessary,  in  order  to  save  the  plaintiff's 
action,  to  avoid  the  effect  of  the  written  contract ;  and  this 
burden  was  assumed,  on  the  argument,  by  the  counsel  of  the 
plaintiff.  The  position  taken  with  this  view  was,  that  the 
policy  was  obtained  for  the  plaintiff  by  the  agent  of  the  defend- 
ants, and  that  he  knew  that  the  building  in  question  was,  in 
part,  used  as  a  stable. 

The  plaintiff's  claim  appears  to  be  a  meritorious  one,  and 


c.  VI.  Dewees  v.  Manhattan  Ins.  Co.  371 

on  this  account,  and  in  the  hope  that  there  might  be  found 
some  legal  ground  on  which  to  support  this  action,  the  case 
was  allowed  by  me  at  the  circuit  to  go  to  the  jury,  and  the 
questions  of  law  were  reserved  for  this  court.  But  the  consid- 
eration which  I  have  since  given  the  matters  involved  has 
excluded  the  faintest  idea  that,  upon  legal  principles,  this  suit 
can  be  successfully  carried  through.  In  my  opinion,  that  end 
can  be  attained  only  by  the  sacrifice  of  legal  rules  which  are 
settled,  and  are  of  the  greatest  importance.  Let  us  look  at  the 
proposition  to  which  we  are  asked  to  give  our  assent. 

The  contract  of  these  parties,  as  it  has  been  committed  to 
writing,  is,  that  if  the  plaintiff  shall  keep  a  stable  on  the 
premises  insured,  for  the  time  being  the  policy  shall  be  vacated. 
But,  it  is  said,  the  agent  of  the  defendants  who  procured  this 
contract  was  aware  that  the  real  contract  designed  to  be  made 
was  that  the  plaintiff  might  apply  the  premises  to  this  use. 
This  knowledge  of  the  agent  of  the  defendants,  and  which,  it 
is  conceded,  will  bind  the  defendants,  is  to  have  the  effect  to 
vary  the  obligations  of  the  written  contract.  Upon  what 
principle  is  this  to  be  done  ? 

There  is  no  pretense  of  any  fraud  in  the  procurement  of 
this  policy.  The  only  ground  that  can  be  taken  is,  that  the 
agent,  knowing  that  the  premises  were  to  be,  in  part,  used  as  a 
stable,  should  have  so  described  the  use  in  the  policy.  The 
assumption  is,  and  must  be,  that  the  warranty,  in  its  present 
form,  was  a  mistake  in  the  agent.  But  a  mistake  cannot  be 
corrected,  in  conformity  with  our  judicial  system,  in  a  court  of 
law.  No  one  can  doubt  that  in  a  proper  case  of  this  kind  an 
equitable  remedy  exists.  It  is  possible,  therefore,  that  in  this 
case,  in  equity,  the  present  contract  might  be  reformed  so  as  to 
contain  a  permission  for  the  plaintiff  to  keep  his  stable  in  this 
building;  but  I  think  it  has  never  before  been  supposed  that 
this  end  could  be  reached  in  this  State  by  proof  before  the  jury 
in  a  trial  at  the  circuit.  The  principle  would  cover  a  wide 
field,  for,  if  this  mistake  can  be  there  corrected,  so  can  every 
possible  mistake.  If  the  plaintiff  can  modify  the  stipulation 
with  respect  to  the  restricted  use  of  the  premises,  on  the  plea 
of  a  mistake  in  such  stipulation,  on  similar  grounds  it  would  be 
open  to  the  company  to  modify  the  policy  with  respect  to  the 
amount  insured.     I  am  at  a  loss  to  see  how,  on  the  adoption  of 


372  Insurance  :    Fikk,   Life,  Marine.  o.  vi. 

the  principle  claimed,  we  are  to  keep  separate  the  functions  of 
our  legal  and  equitable  tribunals. 

Nor  do  I  think,  if  this  court  should  sustain  the  present 
action,  that  it  could  be  practicable  to  preserve,  in  any  useful 
form,  tlie  great  primary  rule  that  written  instruments  are  not 
to  be  varied  or  contradicted  by  parol  evidence.  The  knovirl- 
edge  of  the  agent,  in  the  present  transaction,  is  important  only 
as  sliowing  what  the  tacit  understanding  of  the  contracting 
parties  was.  Suppose,  instead  of  proof  of  such  tacit  under- 
standing, the  plaintiff  had  offered  to  make  a  stronger  case,  by 
showing  that  the  agent  expressly  agreed  that  the  building 
might  be  used  not  only  as  a  country  store,  as  the  policy  stated, 
but  also  as  a  stable,  and  that  the  restraining  stipulation  did 
not  apply  to  the  extent  expressed.  Can  any  one  doubt  that, 
according  to  the  practice  and  decisions  in  this  State,  such  proof 
should  have  been  rejected  ?  A  rule  of  law  admitting  such  evi- 
dence would  be  a  repeal  of  the  principle  giving  a  controlling 
efficacy  to  written  agreements.  The  memory  and  understand- 
ing of  those  present  at  the  formation  of  the  contract  would  be 
quite  as  potent  as  the  written  instrument. 

I  have  not  found  that  it  is  anywhere  supposed  that  this 
general  rule  which  illegalizes  parol  evidence,  under  the  condi- 
tions in  question,  has  been  relaxed  with  respect  to  contracts 
for  insurance.  Decisions  of  the  utmost  authority,  both  in 
England  and  in  this  country,  propound  this  doctrine  as  applica- 
ble to  policies  in  the  clearest  terms.  Chief  Justice  Parker,  in 
his  opinion  in  Iligginson  v.  Dall,  13  Mass.  96,  says  that  "  pol- 
icies, though  not  under  seal,  have,  nevertheless,  ever  been 
deemed  instruments  of  a  solemn  nature,  and  subject  to  most 
of  the  rules  of  evidence  which  govern  in  the  case  of  specialties. 
The  policy  is  itself  considered  to  be  the  contract  between  the 
parties,  and  whatever  proposals  are  made,  or  conversations  had, 
prior  to  the  subscription,  they  are  to  be  considered  as  waived, 
if  not  inserted  in  the  policy,  or  contained  in  a  memorandum 
annexed  to  it."  Atherton  v.  Brown,  14  Mass.  152,  is,  upon 
this  point,  of  the  same  complexion,  and  has  close  pertinency  to 
the  case  under  consideration  with  respect  to  the  application  of 
the  rule  of  evidence.  The  description  was  of  property  insured 
"  on  board  the  Spanish  brig  New  Constitution,''^  and  the  /essel 
was  captured,  and,  with  her  cargo,  was  condemned  as  Araeri- 


0.  VI.  Dewees  v.  Manhattan  Ins.  Co.  373 

can  property  ;  and  it  was  held  that  the  description  in  the  policy 
amounted  to  a  warranty  that  the  vessel  was  Spanish,  and  that 
it  was  not  competent  for  the  assured  to  show  that  the  under- 
writers were  informed,  at  the  time  of  their  subscription,  that 
she  was,  in  fact,  an  American  vessel.  The  court  said  that 
parol  evidence  of  what  was  within  the  knowledge  of  the  under- 
writers was  not  admissible.  The  following  are  cases  which 
establish  the  same  proposition :  Yandervoort  v.  The  Coluiiihia 
Insurance  Company,  2  Caines'  E..  155 ;  Weston  v.  Mnes,  1 
Taunt.  115;  Parks  v.  General  Int.  Assur.  Co.,  5  Pick.  34; 
Flinn  V.  ToUn,  1  Mood.  &  Malk.  367 ;  Jetinings  v.  The  Che- 
nango Mut.  Ins.  Co.,  2  Denio,  75  ;  Angell  on  Fire  and  Life 
Ins.,  §§  20,  21. 

There  are  several  reported  decisions  which  I  do  not  think  are 
distinguishable  with  respect  to  legal  rules  and  their  application, 
from  the  present.  Among  these  is  that  of  Jennings  v.  Th€ 
Chenango  Mutual  Insurance  Company,  2  Denio,  75.  There  the 
property  insured  was  described  as  a  "  grist-mill,"  and  it  was 
proved  that  carpenters'  work  was  accustomed  to  be  done  in  ic, 
with  instruments  and  fixtures  which  were  kept  there.  One  of 
the  principal  questions  in  the  case  was  whether  it  was  com- 
petent to  prove,  that,  at  the  time  the  application  was  made  for 
this  policy,  the  agent  for  the  defendants  was  informed  that 
these  fixtures  were  in  use  in  the  mill.  This  proof  was  rejected, 
and  the  policy  held  void ;  the  ground  of  rejection  being  the 
general  rule  of  evidence,  which  places  written  instruments 
above  the  level  of  parol  testimony.  Quite  as  strong  in  favor 
of  the  same  doctrine  is  the  case  of  Kennedy  v.  The  Si.  Lawrence 
County  Mutual  Insurance  Company,  10  Barbour,  285.  The 
application  of  the  insured,  which  formed  a  part  of  the  policy, 
described  erroneously  the  buildings  which  were  within  a  cer- 
tain distance  of  the  premises.  Here  the  same  circumstance 
was  relied  on  as  a  defense  Avhich  has  been  set  up  in  the  present 
case ;  namely,  that  the  agent  of  the  defendants  had  full  knowl- 
edge of  the  situation  of  the  premises  and  its  neighborhood,  and 
that  he  drew  the  application,  and  specified  in  it  such  buildings 
as  he  chose.  This  defense  was  overruled,  and  the  defendants 
had  judgment. 

With  respect  to  the  case  of  Plumb  v.  The  Cattaraugus 
County  Mutual  Insurance  Company,  18  N.  Y.  392,  to  which 


374:  In8URA.nck  :   Fire,  Life,  Mabinb.  o.  ti. 

we  were  referred  by  counsel,  my  answer  is  two-fold  :  first, 
that  I  cannot  assent  to  the  doctrine  on  which  that  judgment  is 
founded ;  and,  in  the  second  place,  that  doctrine,  if  correct, 
could  have  no  application  to  the  facts  now  under  considsration. 
In  the  case  from  New  York  here  referred  to,  there  was,  in 
the  application  for  the  policy,  a  misdescription  of  the  distance 
of  the  adjacent  buildings  from  the  premises  insured,  and  to 
this  defense  the  reply  was,  that  the  agent  of  the  company  had 
made  the  measurements,  and  had  obtained  the  signature  of  the 
plaintiff  on  the  assurance  "that  the  application  was  all  right, 
and  just  as  it  should  be."  The  court  decided  that  this  declara- 
tion of  the  agent  could  not  be  offered  for  the  purpose  of  alter- 
ing or  contradicting  the  written  contract,  but  that  it  was 
admissible  as  an  estoppel  in  pais.  Now,  it  is  at  once  obvious 
that,  by  force  of  that  view,  the  agreement  in  question  was 
enforced,  not  in  the  sense  of  the  written  terms,  but  in  the 
sense  of  the  oral  evidence,  and  that  the  practical  result  was 
precisely  the  same  as  though  the  instrument  had  been  reformed 
in  conformity  to  such  evidence  at  the  trial.  I  think  there  is 
no  doubt  that  this  application  of  the  doctrine  of  estoppel  to 
written  contracts  is  an  entire  novelty.  In  the  long  line  of 
innumerable  cases  which  have  proceeded  and  been  decided  on 
the  ground  that  parol  evidence  is  not  admissible  as  against  a 
Bvritten  instrument,  no  judge  or  counsel  has  ever  intimated,  as 
it  is  believed,  that  the  same  result  could  be  substantially 
obtained  by  a  resort  to  this  circuity.  It  is  true  that,  if  there 
be  a  substantial  ground  in  legal  principle  for  its  introduction, 
the  fact  that  it  is  new  will  not  debar  from  its  adoption ;  but  I 
have  not  been  able  to  perceive  the  existence  of  such  substantial 
ground.  In  my  apprehension,  the  doctrine  can  be  made  to 
appear  plausible  only  by  closing  the  eyes  to  the  reason  of  the 
rule  which  rejects,  in  the  presence  of  written  contracts,  evi- 
dence by  parol.  That  reason  is,  that  the  common  good 
requires  that  it  shall  be  conclusively  presumed  in  an  action  at 
law,  in  the  absence  of  deceit,  that  the  parties  have  committed 
their  real  understanding  to  writing.  Hence,  it  necessarily  fol- 
lows, that  all  evidence  merely  oral  is  rejected,  whose  effect  is 
to  vary  or  contradict  such  expressed  understanding.  Sucn 
rejection  arises  from  the  consideration  that  oral  testimony  is 
unreliable   in  comparison  with   that  which  is  written.     It  is 


0.  VI.  Dewees  v.  Manhattan  Ins.  Co.  375 

idle  to  say  that  the  estoppel,  if  permitted  to  operate,  will  pre- 
vent a  fraud  or  inequitable  result ;  most  parol  evidence  contra- 
dictory of  a  written  instrument  has  the  same  tendency  ;  but 
such  evidence  is  rejected  not  because,  if  true,  it  ought  not  to  be 
received,  but  because  the  written  instrument  is  the  safer  crite- 
rion of  what  was  the  real  intention  of  the  contracting  parties. 
In  the  case  now  criticised,  the  party  insured  stipulated  against 
the  existence  of  buildings  within  a  definite  number  of  feet  from 
the  insured  property  ;  by  the  admission  of  parol  testimony,  this 
stipulation  was  restricted  and  limited  in  its  effect.  This  result, 
no  doubt,  was  strictly  just,  if  we  assume  that  the  parol  evidence 
was  true ;  but,  standing  opposed  to  the  written  evidence,  the  law 
presumed  the  reverse.  The  alternative  is  unavoidable  ;  it  is  a 
choice  between  that  which  is  written  and  that  which  is  unwrit- 
ten. In  the  case  cited,  the  effect  of  the  rule  adopted  by  the 
court  was  to  give  a  different  effect  to  the  written  terms  from 
that  which  they  intrinsically  possessed,  a  result  induced  by  the 
admission  of  oral  evidence.  This,  I  cannot  but  think,  was  a 
palpable  alteration  of  the  agreement  of  the  parties.  The  mis- 
take of  the  court  appears  to  have  been  in  regarding  simply  the 
legal  effects  of  the  facts  which  were  proved  by  parol.  Receiv- 
ing that  testimony  into  the  case,  a  clear  estoppel  was  made 
out ;  but  the  error  consisted  in  the  circumstance  that  such  oral 
evidence  was,  on  rules  well  settled,  inadmissible.  The  question 
presented  was  purely  one  as  to  a  rule  of  evidence,  but  it  was 
treated  as  a  problem  relating  to  the  application  of  general 
legal  principles  to  an  admitted  state  of  facts.  The  case  was 
not  decided  by  a  unanimous  court ;  three  judges  dissented, 
and,  in  my  judgment,  that  dissent  was  based  on  satisfactory 
grounds. 

But  it  has  been  already  observed,  that,  even  if  the  doctrine 
of  the  adjudication  should  be  received  by  this  court,  such  result 
could  have  no  effect  on  our  decision  of  the  present  case.  The 
reason  is,  that  the  facts  now  before  us  do  not  present  the  ele- 
ments of  an  estoppel.  Such  a  defense  rests  on  a  misconception 
as  to  a  state  of  facts,  induced  by  the  party  against  whom  it  is 
set  up.  The  person  who  seeks  to  take  advantage  of  it  must 
have  been  misled  by  the  words  or  conduct  of  another.  Now, 
in  the  present  case,  the  agent  did  not  make  any  statement  nor 
did  he  do  anything  which  led  the  plaintiff  to  alter  his  condi- 


876  Insukanob  :   Fire,  Life,  Marine.  c.  VL 

tion.  The  most  that  can  be  laid  to  his  charge  is,  that  from 
carelessness  he  omitted  properly  to  describe  the  use  of  the 
premises  insured.  But  this  was  not  a  misstatement  of  a  fact 
on  which  the  plaintiff  acted,  because  the  plaintiff  was  aware  of 
the  circumstance  that  the  building  was  put  to  another  use. 
The  alleged  error  in  the  description  is  plain  on  the  face  of  the 
policy,  and  the  law  incontestably  charges  the  defendant  with 
knowledge  of  the  meaning  and  legal  effect  of  his  own  written 
contract.  Certainly  the  entire  state  of  things  was  as  well 
known  to  the  plaintiff  as  it  was  to  the  agent  of  the  defendants. 
To  found  an  estoppel  on  the  ignorance  of  the  plaintiff  of  the 
plainly  expressed  meaning  of  his  own  contract,  would  be 
absurd. 

Being  of  opinion  that  the  plaintiff's  case,  on  this  first  point, 
cannot  stand,  I  have  not  thought  it  necessary  to  look  into  the 
other  grounds  of  objection  raised  on  the  part  of  the  defense. 


CHAPTER  Vn. 

GENERAL  PRINCIPLES. 

Waiver  and  Estoppel — Continued. 

OONNEOTICUT    SuPREME    CoURT  OF   ErRORS,    1871. 

COUCH  V.   CITY  FIRE   INS,   CO. 

(38  Conn.  181.) 
Essential  provisions  of  the  charter  cannot  be  waived.^ 

Assumpsit  on  a  policy  of  insurance. 

The  twelfth  section  of  the  defendants'  charter  contained 
the  following  provision:  "If  there  shall  be  any  other  insur- 
ance upon  the  whole  or  any  part  of  the  property  insured  by 
any  policy  issued  by  said  company,  during  the  whole  or  any 
part  of  the  time  specified  in  such  policy,  then  every  such  policy 
shall  be  void,  unless  such  double  insurance  shall  exist  by  con- 
sent of  said  company,  indorsed  upon  the  policy  under  the  hand 
of  the  secretary." 

The  defendants  insured  Mrs.  Couch,  one  of  the  plaintiffs, 
on  a  dwelling-house  and  other  property  owned  by  her,  by  a 
policy  containing  a  condition  similar  in  substance  to  the  above 
provision  of  the  charter.  At  the  time  the  policy  was  issued 
other  insurance  existed  on  the  same  property  in  the  North 
American  Fire  Insurance  Company,  but  the  consent  of  the  de- 
fendants to  such  other  insurance  was  not  indorsed  upon  the 
policy.  The  insured  property  having  been  destroyed  by  fire, 
this  action  was  brought  to  recover  the  loss. 

'  The  opinion  of  the  court  contains  a  good  exposition  of  this  principle,  but 
the  application  of  it  made  to  the  facts  of  this  case  would  seem  to  be  open  to 
some  question.  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Sehell,  29  Pa.  St. 
SI;  Hoxsie  v.  Prov.  Mut.  Fire  Ins.  Co.,  (J  R.  I  517;  Puller  v.  Boston  Fire  Ins. 
Co.,  4  Met.  (Mass.),  206 ;  Wilbur  v.  New  England  Mut.  Fire  Ins.  Co.,  31  Me. 
«19. 


378  Insdbanoe  :   Fire,  Life,  Marine.  o.  m. 

On  the  trial  the  plaintiffs  claimed  that  it  was  competent 
for  the  defendants  to  waive  the  above  conditions  of  the  charter 
and  the  policy,  by  acts  in  parol,  and  introduced  parol  evidence 
to  prove  such  waiver  by  the  officers  and  agent  of  the  company. 
The  defendants  objected  to  the  admission  of  such  evidence, 
but  the  court  admitted  it.  The  defendants  also  asked  the 
court  to  charge  the  jury  that  it  was  not  competent  to  prove 
the  consent  of  the  company  to  such  double  insurance  by  any 
other  evidence  than  an  indorsement  of  such  consent  upon  the 
policy  under  the  hand  of  the  secretary,  nor  was  it  competent 
for  the  executive  officers  of  the  company,  by  any  acts  in  parol, 
to  waive  a  substantial  compliance  with  the  requirements  of 
their  charter  in  this  respect,  and  in  reference  to  this  policy. 

The  court  (Pardee,  J.)  charged  the  jury,  that  the  question 
of  waiver  was  for  them  upon  all  the  evidence  before  them,  and 
that,  if  the  executive  officers  of  the  company  had  waived  the 
right  to  require  such  evidence  of  consent,  by  any  acts  in  parol 
which  they  should  find  proved  in  the  case,  or  if  they  had  au- 
thorized their  agent,  and  he  had  so  waived,  then  the  company 
was  bound,  and  was  estopped  by  such  acts  and  waiver,  not- 
withstanding the  charter  and  the  conditions  of  the  policy,  and 
without  such  indorsement  as  was  called  for  by  the  charter. 

The  jury  returned  a  verdict  for  the  plaintiffs,  and  the  de- 
fendants moved  for  a  new  trial  for  a  verdict  against  evidence, 
and  for  errors  in  the  rulings  and  charge  of  the  court. 

Park,  J. — There  was  double  insurance  in  this  case  at  the 
time  this  policy  was  issued,  and  the  consent  of  the  company 
thereto  was  not  indorsed  upon  the  policy.  The  charter  there- 
fore  declares  the  policy  void,  and  it  is  void  unless  the  twelfth 
section  is  of  such  a  character  that  its  provisions  can  be  waived 
by  the  defendants. 

If  this  provision  was  made  solely  for  the  benefit  of  the  de- 
fendants, there  might  be  force  in  the  claim  of  the  plaintiffs 
that  it  could  be  waived,  on  the  ground  that  what  is  exclusively 
for  the  benefit  of  a  person,  either  natural  or  artificial,  is  for 
him  to  enjoy  or  not  as  he  pleases  ;  and  if  he  chooses  to  forego 
the  benefit,  he  has  a  right  to  do  so,  as  no  one  but  him  is  inter- 
ested in  the  matter.  But  we  think  the  defendants  are  not 
solely  interested  in  this  provision  of  the  charter.     It  was  made 


0.  VII.  CouoH  V.  City  Fire  Ins.  Oo.  379 

to  guard  against  the  danger  of  over-insurance.  It  is  well 
known  that  over-insurance  encourages  incendiary  fires  ;  and 
insurers  are  therefore  extremely  careful  not  to  insure  property 
to  the  full  amount  of  its  value,  but  leave  the  assured  to  be  him- 
self the  insurer  of  a  pai't  thereof,  that  he  may  have  a  common 
interest  with  them  in  the  preservation  of  the  property.  The 
eleventh  section  of  the  defendants'  charter,  as  well  as  the  one 
under  consideration,  shows  what  solicitude  the  legislature 
entertained  lipon  this  subject,  and  the  great  care  they  exer- 
cised to  prevent  this  evil. 

Such  being  the  tendency  of  over-insurance,  it  is  manifest 
that  it  endangers  not  only  the  welfare  of  insurers,  but  the 
welfare  of  all  their  policy-holders,  who  have  a  deep  interest 
in  their  solvency  in  case  of  loss  by  fire.  Insurance  companies 
insure  property  to  an  amount  many  times  their  capital,  and  it 
may  easily  happen  that  a  few  fraudulent  incendiary  fires  scat- 
tered over  the  countiy  should  involve  them  and  their  policy- 
holders in  heavy  and  perhaps  ruinous  losses.  But  the  evil  of 
over-insurance  does  not  stop  here.  Ever}' where  insured  prop- 
erty is  mingled  indiscriminately  with  property  not  insured. 
The  burning  of  the  insured  property  burns  the  other  also  ;  and 
ever}'  year  vast  amounts  of  property  not  insured  go  to  destruc- 
tion in  consequence  of  the  over-insurance  of  property  in  its 
neighborhood.  Surely  the  welfare  of  such  owners  should  be 
considered  by  legislatures,  and  provision  should  be  made  for 
them  when  corporations  like  these  are  created.  It  is  to  be  con- 
sidered also  that  the  welfare  of  the  State,  which  has  an  interest 
in  all  the  property  of  the  State,  requires  that  this  should  be 
done. 

One  great  source  of  this  evil  is  the  insurance  of  the  same 
property  by  different  companies,  when  each  company  is  not 
aware  of  the  act  of  the  other.  To  prevent  this  evil,  as  far  as 
may  be,  in  the  present  case,  we  think  the  legislature  inserted 
the  twelfth  section  in  the  defendants'  charter,  intending  thereby 
to  put  it  out  of  the  power  of  the  defendants  to  insure  property 
otherwise  than  is  provided  therein. 

The  evil  could  not  be  successfully  reached  by  merely  requir- 
ing the  consent  of  the  company  to  such  further  insurance. 
There  would  be  no  security  from  misunderstanding,  misremera- 
brance,  and  fraud.    The  difference  is  great  between  leaving  the 


380  Insurance  :    Fire,  Life,  Marine.  o.  vii. 

consent  of  the  company  to  be  proved  by  the  vagueness  and 
uncertainty  of  parol  evidence,  and  requiring  it  to  be  shown  by 
a  formal  indorsement  upon  the  policy  under  the  hand  of  their 
secretary,  which  could  not  be  made  without  consideration  and 
deliberation  on  the  one  hand,  and  certainty  of  the  fact  on  the 
other.     Hale  v.  Mechanics   Mut.  Fire  Ins.  Co.,  6  Gray,  169. 

This  difference  is  all-important  in  a  case  like  this ;  and,  in- 
deed, if  mere  consent  was  all  that  the  legislature  intended  by 
the  twelfth  section  of  this  charter,  then  no  object  was  accom- 
plished, or  could  be  accomplished,  by  inserting  it  in  the  char- 
ter ;  for  if  the  defendants  should  make  an  absolute  contract  of 
insurance,  without  any  condition  that  it  should  become  void  if 
there  was  or  should  be  further  insurance  on  the  property  by 
any  other  company,  during  the  whole  or  any  part  of  the  time 
covered  by  the  policy,  they  would  be  taken  by  jurors  as  having 
given  consent  in  advance  to  such  further  insurance  ;  or  the 
mere  fact  of  such  al)solute  contract  would  be  sufficient  evidence 
with  them  of  a  waiver  of  the  condition.  It  would  be  urged 
that  the  plaintiff  was  ignorant  of  the  provisions  of  the  charter, 
and,  if  the  defendants  intended  to  make  it  a  part  of  the  con- 
tract, they  would  have  informed  the  plaintiff  by  inserting  it  in 
the  policy.  Thus,  in  order  to  make  it  a  part  of  the  contract, 
it  would  have  to  be  inserted  in  the  policy  of  insurance,  whether 
it  was  embodied  in  the  charter  or  not ;  and,  if  inserted  in  the 
policy,  it  would  have  all  the  effect  that  the  charter  could  give 
it,  if  the  legislature  intended  no  more  by  this  provision  than 
mere  consent.  We  think,  therefore,  that  the  legislature  had 
more  than  this  in  view,  and  intended  to  limit  the  power  of  the 
company  in  the  matter. 

If,  then,  the  twelfth  section  must  have  such  construction, 
manifestly  it  could  not  be  waived  by  the  defendants,  or  de- 
parted from  in  any  essential  particular  ;  for,  in  the  language  of 
Chief  Justice  Marshall,  in  the  case  of  Head  v.  Providence  Ins. 
Co..,  2  Cranch,  127,  "  the  act  of  incorporation  is  an  enabling 
act ;  it  gives  the  corporation  all  the  power  it  possesses  ;  it 
enables  it  to  contract,  and  when  it  prescribes  to  it  a  form  of 
contracting  it  must  observe  that  mode,  or  the  instrument  no 
more  creates  a  contract  than  if  the  body  had  never  been  incor- 
porated." Pliillips  on  Insurance  (vol.  i.  p.  9)  says  an  incor- 
porated insurance  company  ''  is  the  mere  creature  of  the  act  to 


o.  yii.  Union  Mutual  Life  Ins.  Co.  v.  Mowrt.  881 

which  it  owes  its  existence,  and  may  be  said  to  be  precisely 
what  the  incorporating  act  has  made  it,  to  derive  all  its  powers 
from  that  act,  and  to  be  capable  of  exercising  them  only  in  the 
manner  which  that  act  authorizes."  See  also  Kew  London  v. 
Brainard,  22  Conn.  552;  Occum,  Co.n.  Sprague  Manufactur- 
ing Co.^  34  Conn.  529  ;  Hood  v.  New  York  c&  New  Haven  R.R. 
Co.,  22  Conn.  502. 

We  think,  therefore,  that  it  was  not  competent  for  the 
plaintiffs  to  prove  the  consent  of  the  defendants  to  the  double 
insurance  on  the  plaintiffs'  property  by  any  other  evidence 
than  an  indorsement  of  such  consent  on  the  policy  under  the 
hand  of  the  secretary  of  the  company,  and  that  the  jury 
should  have  been  so  instructed. 

In  this  opinion  the  other  judges  concurred ;  except  Fostkb, 
J.,  who  dissented. 

New  trial. 

United  States  Supreme  Court,  187T. 
UNION   MUTUAL    LIFE   INS.   CO.   v.   MOWRT. 

(96  U.  S.  544.) 

An  oral  promise  of  the  insurers  or  their  agent,  made  at  the  time  of  or  before  the 
contract,  will  not  operate  as  an  estoppel  or  waiver,  and  cannot  be  shown  to 
contradict  the  policy. 

Action  upon  a  policy  of  insurance  of  which  the  concluding 
clause  is  as  follows:  "  But  the  same  [the  policy]  shall  not  be 
binding  until  countersigned  and  delivered  by  John  Shepley, 
agent,  at  Providence,  R.  L,  nor  until  the  advance  premium  is 
paid." 

There  was  a  verdict  for  the  plaintiff ;  and,  judgment  having 
been  rendered  thereon,  the  defendant  sued  out  this  writ  of 
error. 

Mr.  Justice  Field  delivered  the  opinion  of  the  court. 

This  was  an  action  on  a  policy  of  insurance,  issued  by  the 
Union  Mutual  Life  Insurance  Company,  a  corporation  created 
under  the  laws  of  Maine,  upon  the  life  of  Nelson  H.  Mowry, 
for  the  sum  of  $10,000.  The  insurance  was  effected  by  (the 
plaintiff)  a  nephew  of  the  insured,  for  his  sole  benefit.     The 


882  Insurance  :   Fire,  Life,  Marine.  a  vn, 

nephew  was  at  the  time  a  creditor  of  tlie  insured  to  the  extent 
of  $6,000,  and  had  agreed  to  embark  with  him  in  an  enterprise 
requiring  the  expenditure  of  considerable  capital,  and  depend- 
ing for  its  success  upon  the  knowledge  and  skill  of  the  insured 
in  business.  These  circumstances  gave  the  nephew  such  an  in- 
terest in  the  life  of  the  insured  as  to  prevent  the  policy  from 
being  a  wager  one.  The  insurance  effected  was  from  the  9th 
of  March,  1867,  and  the  policy  recited  the  payment  of  the  first 
annual  premium  on  that  day,  and  stipulated  for  the  payment 
of  the  subsequent  premiums  on  the  same  day  of  that  month 
each  year.  The  payment  of  the  insurance  money,  after  notice 
and  proof  of  the  death  of  the  insured,  was  made  dependent 
upon  the  punctual  payment,  each  year,  of  the  premium.  The 
policy,  in  terms,  declared  that  it  was  made  and  accepted  by 
the  insured  and  the  nephew,  upon  the  express  condition  that  if 
the  amount  of  any  annual  premium  was  not  fully  paid  on  the 
day  and  in  the  manner  provided,  the  policy  should  be  "  null 
and  void,  and  wholly  forfeited."  And  it  declared  that  no 
agent  of  the  company,  except  the  president  and  secretary, 
could  waive  such  forfeiture,  or  alter  that  or  any  other  condi- 
tion of  the  policy. 

The  second  premium,  due  on  the  9th  of  March,  1868,  was 
not  paid,  and  the  insured  died  on  the  8th  of  April  following. 
Forty-five  days  after  it  was  due,  and  fifteen  days  after  the 
death  of  the  insured,  this  premium  was  tendered  to  the  com- 
pany, and  was  refused.  The  question  for  determination  is, 
whether  a  tender  of  the  premium  at  that  time  was  sufficient  to 
hold  the  company  to  the  payment  of  the  insurance  money. 

By  the  express  condition  of  the  policy,  the  liability  of  the 
company  was  released  upon  the  failure  of  the  insured  to  pay 
the  premium  when  it  matured ;  and  the  plaintiff  could  not 
recover,  unless  the  force  of  this  condition  could  in  some  way  be 
overcome.  He  sought  to  overcome  it  by  showing  that  the 
agent  who  induced  him  to  apply  for  the  policy  represented  to 
him,  in  answer  to  suggestions  that  he  might  not  be  informed 
when  to  pay  the  premiums,  that  the  company  would  notify  him 
in  season  to  pay  them,  and  that  he  need  not  give  himself  any 
uneasiness  on  that  subject ;  that  no  such  notification  was  given 
to  him  before  the  maturity  of  the  second  premium,  and  for 
that  reason  he  did  not  pay  it  at  the  time  required.     This  rep- 


a  VII.  Union  Mutual  Life  Ins.  Co.  v.  Mowky.  383 

resentatiori  before  the  policy  was  issued,  it  was  contended  in 
the  court  below,  and  in  this  court,  constituted  an  estoppel  upon 
the  company  against  insisting  upon  the  forfeiture  of  the  policy. 

But  to  this  position  there  is  an  obvious  and  complete  answer. 
All  previous  verbal  arrangements  were  merged  in  the  written 
agreement.  The  understanding  of  the  parties  as  to  the  amount 
of  the  insurance,  the  conditions  upon  which  it  should  be  pay- 
able, and  the  premium  to  be  paid,  was  there  expressed  for  the 
very  purpose  of  avoiding  any  controversy  or  question  respecting 
them.  The  entire  engagement  of  the  parties,  with  all  the  con- 
ditions upon  which  its  fulfillment  could  be  claimed,  must  be 
conclusively  presumed  to  be  there  stated.  If,  by  inadvertence 
or  mistake,  provisions  other  than  those  intended  were  inserted, 
or  stipulated  provisions  were  omitted,  the  parties  could  have  had 
recourse  for  a  correction  of  the  agreement  to  a  court  of  equity, 
w^hich  is  competent  to  give  all  needful  relief  in  such  cases. 
But,  until  thus  corrected,  the  policy  must  be  taken  as  express- 
ing the  final  understanding  of  the  assured  and  of  the  insurance 
company. 

The  previous  representation  of  the  agent  could  in  no  respect 
operate  as  an  estoppel  against  the  company.  Apart  from  the 
circumstance  that  the  policy  subsequently  issued  alone  expressed 
its  contract,  an  estoppel  from  the  representations  of  a  party  can 
seldom  arise,  except  where  the  representation  relates  to  a  matter 
of  fact — to  a  present  or  past  state  of  things.  If  the  represen- 
tation relate  to  something  to  be  afterwards  brought  into  ex- 
istence, it  will  amount  only  to  a  declaration  of  intention  or  of 
opinion,  liable  to  modification  or  abandonment  upon  a  change 
of  circumstances  of  which  neither  party  can  have  any  certain 
knowledge.  The  only  case  in  which  a  representation  as  to  the 
future  can  be  held  to  operate  as  an  estoppel  is  where  it  relates 
to  an  intended  abandonment  of  an  existing  right,  and  is  made 
to  influence  others,  and  by  which  they  have  been  induced  to 
act.  An  estoppel  cannot  arise  from  a  promise  as  to  future 
action  with  respect  to  a  right  to  be  acquired  upon  an  agree- 
ment not  yet  made. 

The  doctrine  of  estoppel  is  applied  with  respect  to  repre- 
sentations of  a  party,  to  prevent  their  operating  as  a  fraud  upon 
one  who  has  been  led  to  rely  upon  them.  They  would  have 
that  effect,  if  a  party,  who,  by  his  statements  as  to  matters  of 


884  Insurance  :   Fire,  Life,  Marine.  o.  vil 

fact,  or  as  to  his  intended  abandonment  of  existing  rights,  had 
designedly  induced  another  to  change  his  conduct  or  alter  his 
condition  in  reliance  upon  them,  could  be  permitted  to  deny  the 
truth  of  his  statements,  or  enforce  his  rights  against  his  de- 
clared intention  of  abandonment.  But  the  doctrine  has  no  place 
for  application  when  the  statement  relates  to  rights  depending 
upon  contracts  yet  to  be  made,  to  which  the  person  complain- 
ing is  to  be  a  party.  He  has  it  in  his  power  in  such  cases  to 
guard  in  advance  against  any  consequences  of  a  subsequent 
change  of  intention  and  conduct  by  the  person  with  whom  he 
is  dealing.  For  compliance  with  arrangements  respecting  future 
transactions,  parties  must  provide  by  stipulations  in  their  agree- 
ments when  reduced  to  writing.  The  doctrine  carried  to  the 
extent  for  which  the  assured  contends  in  this  case  would  sub- 
vert the  salutary  rule  that  the  written  contract  must  prevail 
over  previous  verbal  arrangements,  and  open  the  door  to  all 
the  evils  which  that  rule  was  intended  to  prevent.  White  v. 
Ashton,  51  N.  Y.  280  ;  Bigelow,  Estoppel,  437-441  ;  White 
V.   Walker,  31  Bl.  422  ;  Faxtoti  v.  Faxon,  28  Mich.  159. 

The  learned  judge  who  tried  this  case  in  the  circuit  court 
instructed  the  jury,  in  substance,  that  if  they  could  find  from 
the  language  of  the  agent  that  there  was  an  agreement  between 
him  and  the  assured,  made  before  the  policy  was  executed,  that 
the  latter  should  have  notice  before  he  should  be  required  to 
pay  the  annual  premium,  then  that  the  company,  not  having 
given  such  notice,  was  estopped  from  setting  up  the  forfeiture 
stipulated  by  the  policy  for  non-payment  of  the  premium  when 
due.  For  the  reasons  we  have  stated,  we  think  the  court  erred 
in  this  instruction. 

There  is  nothing  in  the  record  which  shows  that  the  agent 
was  invested  with  authority  to  make  an  insurance  for  the  com- 
pany. In  representing  himself  as  an  agent,  he  only  solicited  an 
application  by  the  assured  to  the  company  for  a  policy.  That 
instrument  was  to  be  drawn  and  issued  by  the  company,  and  it 
shows  on  its  face  that  the  authority  to  the  agent  was  limited 
to  countersigning  it  before  delivery  and  to  receiving  the  pre- 
miums. But  even  if  the  agent  had  possessed  authority  to  make 
an  insurance  for  the  company,  and  he  made  the  agreement  jire- 
tended,  still  the  assured  was  bound  by  the  terms  of  the  policy 
subsequently  executed  and  accepted  by  him. 


c.  VII.  Landeks  v.  Coopeb.  385 

The  judgment  must  be  reversed,  and  tiie  cause  remanded 
for  a  new  trial ;  and  it  is 

/So  ordered. 

New  York  Court  of  Appeals,  1889. 
LANDERS  V.  COOPER. 

(115  N.  Y.  279.) 

A  new  subject-matter  of  insurance  cannot  be  substituted  by  the  doctrine  of 
waiver  and  estoppel. 

Appeal  from  judgment  of  General  Term  of  Supreme  Court 
in  favor  of  plaintiff. 

This  action  was  upon  a  policy  of  insurance  issued  by  the 
"Watertown  Fire  Insurance  Company,  of  which  company  the 
defendant  is  receiver,  to  the  plaintiff,  upon  his  "  two-story 
dwelling-house." 

Andrews,  J. — Two  defenses  are  relied  upon :  first.,  that  the 
building  burned  was  not  the  building  mentioned  in  the  applica- 
tion and  survey,  and  insured  by  the  policy  ;  and,  second.,  that 
when  the  polic}''  in  question  was  issued,  there  was  a  prior  in- 
surance on  the  building  destroyed,  in  the  Glens  Falls  Insurance 
Company,  not  consented  to  Iw  the  Watertown  Fire  Insurance 
Company,  whereby,  by  the  terms  of  the  policy  sued  upon,  it  be- 
came void.  The  defendant,  to  establish  the  first  defense,  relied 
upon  the  following  facts :  (1)  The  policy,  by  its  language,  in- 
sures Landers  in  the  sura  of  $800  "  on  the  property  described 
in  the  apphcation  and  survey  bearing  even  date  therewith,  and 
which  is  hereby  referred  to  as  forming  a  part  of  the  policy  ;  viz., 
$800  on  his  (Landers)  two-story  dwelling-house,  Afton,  N.  Y." 
(2)  The  application  on  which  the  policy  was  issued  describes 
the  property  to  which  the  application  relates  as  situated  in  Af- 
ton, N.  Y.,  and  being  a  tenant-house,  two  stories  high,  sixteen 
by  twenty-four  with  wing  sixteen  by  twenty-four,  with  two 
chimneys,  and  located  sixty  feet  south  of  the  dwelling-house  of 
Landers  (the  applicant),  and  sixty  feet  west  of  a  barn.  This 
is  an  accurate  description  of  the  tenant-house  near  the  dwell- 
ing-house of  Landers,  with  the  exception  that  its  height  is  one 
and  a  half  stories,  and  not  two  stories.  (3)  On  the  back  of  the 
application  is  a  survey  and  diagram  showing  the  dwelling- 
26 


386  Insurance:    Fire,  Life,  Marine.  o.  tii. 

house,  the  tenant-house  (consisting  of  a  main  part  and  wing), 
and  the  barn,  their  rehitive  positions  ;  and  under  the  tenant- 
house  is  the  word  ''  risk."  (4)  The  mill-house  (the  house 
burned)  was  situated  half  a  mile  from  the  dwelling-house  of 
Landers,  and  was  also  a  tenant-house.  It  was  a  building  two 
stories  high,  twenty  by  thirty  feet  in  size,  without  any  wing, 
and  having  but  one  chimney.  It  was  distant,  at  the  nearest 
part,  thirty-seven  feet  from  a  steam  mill  of  Landers.  It  cor- 
responded  in  no  respect  with  the  building  described  in  the  ap« 
plication  and  survey  with  the  single  exception  of  height.  (5) 
The  application  and  survey  were  forwarded  by  Cannon,  the 
agent,  to  the  office  of  the  company  at  Watertown,  and  the 
policy  was  issued  thereon  and  mailed  by  the  company  to  Laa 
ders.  The  company  had  no  information  as  to  the  risk,  or  of 
any  negotiations  between  Cannon  and  Landers  other  than  was 
disclosed  by  the  application. 

The  plaintiff,  notwithstanding  this  apparently  conclusive 
evidence  that  the  house  insured  was  the  tenant-house  and  not 
the  mill-house,  has  recovered  for  the  loss  by  fire  of  the  mill- 
house,  upon  certain  extrinsic  proof  submitted  to  the  jury.  It 
was  shown  that  Landers,  prior  to  the  issuing  of  the  policy  in 
question,  held  two  policies  of  insurance  in  the  Glens  Falls 
Insurance  Company,  of  $800  each — one  on  the  tenant-house 
(near  his  dwelling-house)  expiring  July  1,  18Y3,  and  one  on 
the  mill-house  expiring  May  1,  1874 — each  for  three  3^ears  at 
the  same  rate  of  premium.  The  local  agent  of  the  Glens  Falls 
Insurance  Company,  in  the  spring  or  summer  of  1873,  removed 
and  sold  out  his  business  to  Cannon,  the  local  agent  of  the 
defendant's  company,  who  transferred  to  him,  among  other 
things,  an  "  expiration  book,"  in  which  the  two  pohcies  to 
Landers  were  entered — one  entry  being,  "Thomas  Landers, 
Glens  Falls ;  number  of  policy,  197 ;  property,  Afton,  $800 ; 
premium,  $4.80  ;  expiring  1st  of  July,  1873,"  and  the  other, 
"  Thomas  Landers,  Glens  Falls  Insurance  Company  ;  number, 
351 ;  farm  property  in  Afton,  $800 ;  premium,  $4.80 ;  rate, 
60c. ;  expiring  the  1st  of  May,  1874."  It  will  be  noticed  that 
the  entries  do  not  show  on  their  face  to  what  particular  build- 
ing they  severally  apply.  The  plaintiff's  version  of  the  circum- 
stances  which  preceded  the  issuing  of  the  policy  in  question  is, 
substantially,  that  the  agent  Cannon  in  the  spring  of  1873  met 


a  VII.  Landers  v.  Coopeb.  387 

Landers  and  informed  him  that  the  poHcy  on  the  mill-house 
was  about  expiring,  and  asked  him  if  he  did  not  want  it 
renewed,  stating  that  the  former  agent  of  the  Glens  Falls 
Company  had  left,  and  he  (Cannon)  had  his  papers  and  was 
doing  his  business,  and  that  he  was  the  agent  of  the  Water- 
town  Fire  Insurance  Company,  which  was  a  good  company, 
and  solicited  Landers  to  take  a  polic}''  in  that  company,  to 
which  he  finally  consented.  The  testimony  of  Landers  to  the 
point  that  the  negotiation  with  Cannon  related  to  a  renewal  of 
the  policy  on  the  mill-house  is  corroborated,  to  some  extent,  by 
other  members  of  his  family.  The  policy  which  expired  in 
July,  1873,  was  the  policy  on  the  tenant-house.  The  policy  on 
the  mill-house  did  not  expire  until  May,  18Y4.  It  was  the 
policy  on  the  tenant-house  which  needed  to  be  renewed,  and 
not  the  policy  on  the  mill-house.  But  Landers  relied,  as  he 
claimed,  on  the  assurance  of  Cannon  that  it  was  the  policy  on 
the  mill-house  which  would  expire  first,  and  thereupon  author- 
ized him  to  procure  a  new  insurance  upon  that  building. 
Within  a  short  time  after  the  conclusion  of  the  negotiation. 
Cannon  made  out  the  application  and  survey,  and  signed  the 
name  of  Landers  to  the  application,  and  forwarded  them 
to  the  defendant.  The  application  and  survey,  as  has  been 
shown,  related  to  the  tenant-house  and  not  to  the  mill-house. 
Cannon,  on  the  trial,  contradicted  the  testimony  of  Landers 
and  his  witnesses  as  to  the  fact  that  the  negotiation  between 
himself  and  Landers  related  to  the  mill-house,  and  testified 
that  the  tenant-house  was  pointed  out  by  Landers  as  the  one 
upon  which  the  policy  was  about  to  expire,  and  that  the  prop- 
osition on  his  part  to  procure  a  new  policy  related  to  the  ten- 
ant-house and  not  to  the  mill-house.  Upon  this  state  of  facts 
and  the  additional  fact  testified  to  hy  Landers,  that  he  did  not 
authorize  Cannon  to  sign  any  application,  and  that  he  had  no 
knowledge  of  the  application  or  survey  until  after  the  fire,  the 
court  submitted  to  the  jury  to  find  whether  the  application 
was  authorized  by  Landers,  and  instructed  them  that  if  it  was 
made  without  his  authority  or  knowledge,  and  he  did  not  know 
of  the  representations  therein,  they  should  disregard  the  appli- 
cation and  survey,  and  determine  the  case  upon  the  point 
whether  the  negotiation  between  Landers  and  Cannon  related 
to  the  mill-house,  and  instructed  them,  in  substance,  that  if 


388  Instjranoe:   Fire,  Life,  Makine.  a  vii. 

they  found  that  it  did  relate  to  the  mill-house,  and  not  to  the 
tenant-house,  the  policy  covered  the  mill-house,  and  the  plain- 
tiff was  entitled  to  recover.  The  defendant,  before  the  sub- 
mission of  the  case  to  the  jury,  moved  that  the  case  should  be 
dismissetl  on  the  grounds,  among  others,  that  the  policy  did 
not  cover  the  mill-house,  but  tlie  tenant-house,  and  that,  assum- 
ing the  policy  covered  the  mill-house,  there  was  a  prior  exist- 
ing insurance  thereon  not  consented  to  by  the  defendant. 

We  think  the  case  was  tried  and  submitted  to  the  jury 
upon  an  eiToneous  view  of  the  law.  The  action  was  brought 
distinctly  and  solely  upon  the  polic}^  of  August  1,  1873,  and  to 
enforce  the  contract  of  insurance  contained  in  that  instrument. 
The  building  burned  was  the  mill-house,  and  unless  the  policy 
was  upon  that  building  the  plaintiff  did  not  establish  the  cause 
of  action  alleged  in  the  complaint.  The  subject  of  the  insur- 
ance is  to  be  ascertained  from  the  description  in  the  policy  and 
such  extrinsic  evidence  as  may  be  necessary  to  identify  the 
property  described.  But  extrinsic  evidence  which  goes  beyond 
the  purpose  of  aiding  in  the  interpretation  of  the  written 
contract,  and  tends  to  show  that  the  subject  thereof  was  other 
and  different  from  that  described  in  the  written  instrument — 
that  is  to  say,  in  this  case,  that  the  building  intended  to  be  in- 
sured was  the  mill-house,  although  not  the  building  actually 
covered  by  the  policy — while  it  might  tend  to  establish  a  case 
for  the  reformation  of  the  contract,  would  be  inadmissible  to 
sustain  an  action  to  enforce  the  contract  as  written,  as  thoug-h 
it  applied  to  the  building  intended  to  be  covered,  but  not  de- 
scribed in  the  policy.  The  policy  w.as  issued  upon  a  written 
application  and  survey  made  by  Cannon,  the  local  agent  of  the 
company,  in  the  name  of  Landers,  and  forwarded  by  the  agent 
to  the  main  office  of  the  company.  The  company  approved 
the  application  and  thereupon  issued  and  mailed  the  policy  to 
Landers.  It  must  be  assumed  upon  the  finding  of  the  jury  that 
the  negotiation  between  Cannon  and  Landers  related  to  an  in- 
surance on  the  mill-house  and  not  on  the  tenant-house ;  and, 
further,  that  the  agent  in  making  the  written  application  and 
signing  Landers'  name  thereto,  and  in  making  the  survey 
and  diagram  of  the  premises,  acted  without  Landers'  authority, 
and  that  Landers  had  no  knowledge  of  tlie  representations 
made  by  the  agent  to  the  com  pan}'  until  after  the  lire. 


0.  vn.  Landers  v.  Coopek.  389 

The  evidence  leaves  no  possible  room  for  question  that  the 
company,  when  it  issued  the  policy,  intended  to  insure  the 
tenant-house,  and  not  the  mill-house.  Nor  can  there  be  any 
doubt  that  the  policy  describes  the  tenant-house,  and  not  the 
mill-house,  as  the  subject  insured.  It  is  quite  impossible  to 
treat  this  policy  as  a  contract  insuring  the  mill-house,  if  the 
application  and  survey  are  considered  in  ascertaining  the  sub- 
ject of  insurance.  It  is  only  by  rejecting  them  that  the  subject 
is  left  in  any  possible  doubt.  This  the  trial  court  permitted 
the  jury  to  do  upon  the  theory  that  the  representations  in  the 
application  and  diagram  were  the  unauthorized  acts  of  the 
agent,  and  were  not,  therefore,  binding  upon  Landers.  In 
substance,  the  court  permitted  the  jury  to  strike  from  the 
written  part  of  the  policy  the  clause  referring  to  the  applica- 
tion and  survey,  and  to  regard  only  the  words,  "  $800  on  his 
(Landers)  two-story  dwelling-house,"  which,  standing  alone, 
describe  with  suflBcient  accuracy  the  mill-house,  and  then  to 
find  that  the  policy  was  one  upon  the  mill-house,  as  the  agent 
Cannon  and  Landers  intended. 

The  court  treated  the  case  as  analogous  (1)  to  those  which 
hold  that  a  contract  of  insurance  is  not  defeated  by  a  misrepre- 
sentation as  to  some  fact  material  to  the  risk,  or  made  so  bj"  the 
terms  of  the  contract,  contained  in  an  application  prepared  by 
the  agent  in  the  name  of  the  insured,  but  without  his  author- 
ity, and  upon  which  the  company  acted  in  issuing  the  policy. 
Benninghoff  v.  Agricultural  Ins.  Co.,  93  N.  Y.  496 ;  Sprague 
V.  Holland  Purchase  Ins.  Co.,  69  id.  128;  Vilas  v.  N.  Y.  C, 
Ins.  Co.,  72  id.  590;  Ames  v.  W.  Y.  Union  lis.  Co.,  14  id.  253. 
(2)  To  the  class  of  cases  where  the  agent,  having  been  author- 
ized by  the  insured  to  fill  out  the  application  in  his  name,  mis- 
stated, by  mistake  or  inadvertence,  the  information  given  by 
the  insured,  and  thereby  misled  the  company.  Rowley  v. 
Empire  Ins.  Co.,  36  N.  Y.  550  ;  Baker  v.  Home  life  Ins.  Co., 
64  id.  648 ;  Grattan  v.  Metropolitan  life  Ins.  Co.,  92  id,  274 : 
Bennett  v.  Agricnlttiral  Ins.  Co.,  106  id.  243.  (3)  To  the  cases 
which  hold  that  a  company  cannot  insist  upon  a  condition  declar- 
ing the  contract  to  be  void  if  a  certain  fact  or  situation  exists 
not  represented  to  the  company  and  indorsed  on  the  policy, 
provided  the  company  or  its  authorized  agent  knew  the  fact  or 
situation   relied  upon  to  defeat  the  contract  at  the  time  the 


390  Insurance  :    Fire,  Life,  Marine.  o.  vii. 

contract  was  made.  Van  Sohoick  v.  Niagara  Fire  Ins.  Co., 
68  N.  Y.  434;  RicKmovd  v.  Same,  79  id.  230;  Short  v.  Home 
Ins.  Co.,  90  id.  1().  In  none  of  these  cases  was  there  any 
question  as  to  the  subject  of  the  insurance.  In  all  of  them  it 
was  conceded  that  the  policy  covered  the  building  or  property 
destroyed  by  the  fire.  The  matters  alleged  as  constituting  a 
defense  related  to  some  incident  of  the  contract  or  to  the  per- 
formance of  some  condition  collateral  to  the  express  object  of 
the  contract.  In  cases  falling  within  the  two  classes  of  cases 
first  mentioned,  the  fault  was  committed  by  the  agent  of  the 
defendant,  and  it  is  held,  that,  as  between  the  company  and 
the  insured,  the  company  should  bear  the  loss.  In  cases  of  the 
third  class,  it  is  held  that  it  could  not  have  been  the  intention 
that  the  policy  should  be  defeated  by  reason  of  an  omission  to 
communicate  facts  known  to  the  company  when  the  contract 
was  made,  or  the  failure  to  have  the  written  recognition  of  the 
company  of  their  existence.  The  courts  in  these  cases  apply 
the  doctrine  of  waiver  or  estoppel  to  prevent  fraud  or  injustice. 
But  the  principle  which  relieves  the  party  insured  from  re- 
sponsibility for  unauthorized  representations  made  by  the  agent 
of  the  insurer  in  respect  to  some  incident  of  the  risk,  and  pei'- 
mits  them  to  be  disregarded  in  an  action  to  enforce  the  con- 
tract, has  no  application  where  the  point  in  issue  is  as  to  the 
subject  of  the  insurance,  and  the  contract  is  explicit  upon  that 
point.  If  the  contract  of  insurance  relates  to  one  definite  and 
distinct  subject,  it  cannot  be  turned  into  a  contract  for  the 
insurance  of  another  and  different  subject  on  proof  that  the 
agent  of  the  company,  by  mistake,  described  the  wrong  property 
in  his  application.  The  agent's  authority  here  was  to  "  make 
surveys  and  take  applications  for  insurance."  He  had  no 
authority  to  enter  into  contracts  of  insurance  in  behalf  of  the 
company.  The  company  passed  upon  the  applications  and 
accepted  or  rejected  them  in  its  discretion.  In  determining 
the  question  whether  the  policy  issued  covered  the  mill-house 
or  the  tenant-house,  the  papers  on  which  the  company  acted 
were  material  evidence.  In  ascertaining  to  which  subject  the 
policy  applied,  it  is  immaterial  whether  the  application  was 
made  by  the  authority  of  the  insured  or  not,  or  whether  it  was 
genuine  or  forged.  There  must  be  a  meeting  of  minds  between 
the  parties  to  a  contract  before  a  contract  is  formed.     If  the 


0.  vn.  Landers  v.  Cooper.  391 

facts  show  that  the  company  intended  to  insure  the  tenant- 
house,  and  the  written  contract  apphes  to  that  house,  the 
plaintiff  cannot  recover  in  this  action,  although  he  may  have 
intended  to  procure  an  insurance  on  the  mill-house,  and  by  the 
agent's  fault  the  application  was  made  to  refer  to  the  tenant- 
house.  If  there  is  any  remedy  against  the  company  for  the 
mistake  or  carelessness  of  the  agent,  it  is  not  available  in  an 
action  to  enforce  a  contract  relating  to  one  subject,  as  if  it  were 
a  contract  relating  to  another  subject.  I  am  not  aware  of  any 
principle  in  the  law  of  estoppel  which  prevents  the  defendant 
from  showing  that  the  contract  relates  to  the  tenant-house,  or 
which  justifies  the  court  in  excluding  from  the  consideration  of 
the  jury,  in  the  determination  of  the  issue,  the  application  and 
survey  upon  which  the  company  acted,  because  made  without 
the  authority  of  the  insured  by  the  company's  agent,  "We  are 
of  opinion  that  the  defense,  that  the  policy  was  not  upon  the 
mill-house,  but  was  upon  the  tenant-house,  was  clearly  estab- 
lished, and  that  upon  this  ground  a  nonsuit  should  have  been 
granted. 

All  concur. 

Judgment  reversed. 


CHAPTER  YIII. 

GENERAL   PRINCIPLES. 

Authority  of  Agents  of  the  Company  to  Waive  and  Estop  as 
Affected  hy  Stipulations  in  the  Policy  Restricting  their 
Authority. 

Minnesota  Supreme  Court,  1883. 

KAUSAL  V.   MINNESOTA   FARMERS'   MUT.   FIRE 
INS.    ASSO. 

(31  Minn.  17.) 

Effect  of  stipulation  in  the  policy  that  soliciting  agent  is  not  agent  of  the 
insurers. 

Action  to  recover  upon  a  policy  of  fire  insurance,  issued  to 
husband  and  wife  jointly,  upon  a  certain  house  and  furniture 
in  which  tliey  allege  that  they  had  an  insurable  interest,  and 
which  were  subsequently  destroyed  by  fire.  The  policy  con- 
tained a  stipulation  that  the  soliciting  agent  should  be  deemed 
the  agent  of  the  assured.  The  answer  of  the  defendant  admits 
the  issuance  of  a  joint  policy  to  the  plaintiff's,  alleges  that  the 
same  was  issued  in  reliance  upon  the  statements  and  answers 
contained  in  the  application,  which  the  plaintiffs  agreed  should 
be  warranties  on  their  part;  that  "in  and  by  such  policy  it  is 
provided  that  any  misrepresentation  by  the  assured  of  the 
value,  condition,  situation,  title,  or  occupancy  of  the  property, 
or  any  omission  to  make  known  every  fact  material  to  the 
risk,  or  any  misrepresentation  whatever,  or  fraud,  or  attempt 
at  fraud,  whether  in  written  application  or  otherwise,  shall 
cause  a  forfeiture  of  all  claims  under  the  policy,"  and  "  that  if 
the  interest  of  the  assured  be  not  truly  stated,  then  the  policy 
shall  be  null  and  void."  The  answer  further  alleges  that  in 
their  application  the  plaintiffs  stated  that  the  dwelling-house 


o.  VIII.      Kausal  v.  Minn.  Farmers'  Mut.  F.  Ins.  Asso.       393 

described  was  completed  and  painted,  and  that  such  statement 
was  false. 

The  reply  alleges  that  the  plaintiffs  "  are  foreigners,  and 
ignorant  of  the  English  language,  and  did  not  know  what  was 
contained  in  the  application  for  insurance  mentioned  in  said 
answer;  that  the  same  was  made  out  by  an  agent  of  the  de- 
fendant, and  plaintiffs  signed  the  same  by  his  direction,  with- 
out knowing  the  contents  of  the  same.  The  reply  admits 
"that  said  house  was  not  completed  or  painted,"  but  alleges 
"  that  at  the  time  the  said  application  was  made  an  agent  of 
defendant,  duly  authorized  to  solicit  insurance  and  to  take  and 
receive  applications  therefor  on  the  part  of  the  defendant,  was 
present  at  the  said  house  so  insured,  and  examined  the  same, 
and  fully  knew  all  the  circumstances  of  its  condition,  and 
solicited  said  insurance,  and  wrote  out  said  application  as 
aforesaid,  and  told  the  plaintiffs  the  same  was  correct,  and 
induced  them  to  sign  the  same."  The  reply  denies  all  other 
allegations  than  those  above  admitted. 

On  the  trial  before  Young,  J.,  and  a  jury,  the  defendant 
objected  to  the  reception  of  any  evidence  on  the  part  of  the 
plaintiffs,  on  the  ground  that  it  is  incompetent,  irrelevant,  and 
immaterial  under  the  pleadings,  which  objection  was  sustained. 
The  plaintiffs  then  offered  to  prove  all  the  allegations  of  the 
reply,  which  offer  was  rejected,  and  the  action  was  dismissed. 
Plaintiffs  appeal  from  an  order  refusing  a  new  trial. 

Mitchell,  J. — 1.  On  principle,  as  well  as  for  considerations 
of  public  policy,  agents  of  insurance  companies,  authorized  to 
procure  apphcations  for  insurance,  and  to  forward  them  to  the 
companies  for  acceptance,  must  be  deemed  the  agents  of  the 
insurers  and  not  of  the  insured  in  all  that  they  do  in  preparing 
the  application,  or  in  any  representations  they  may  make  to 
the  insured  as  to  the  character  or  effect  of  the  statements 
therein  contained.  This  rule  is  rendered  necessary  by  the 
manner  in  which  business  is  now  usually  done  by  the  insurers. 
They  supply  these  agents  with  printed  blanks,  stimulate  them 
by  the  promise  of  liberal  commissions,  and  then  send  them 
abroad  in  the  community  to  solicit  insurance.  The  companies 
employ  them  for  that  purpose,  and  the  public  regard  them  as 
the  agents  of  the  companies  in  the  matter  of  preparing  and 


394  Insurance:    Fire,  Life,  Marine.  o.  viii. 

filling  up  the  applications — a  fact  which  the  companies  perfectly 
understand.  The  })arties  who  are  induced  by  these  agents  to 
make  applications  for  insurance  rarely  know  anything  about 
the  general  officers  of  the  company,  or  its  constitution  and  by- 
laws, but  look  to  the  agent  as  its  full  and  complete  represent- 
ative in  all  that  is  said  or  done  in  regard  to  the  application  ; 
and,  in  view  of  the  apparent  authority  with  which  the  com- 
panies clothe  these  solicitors,  they  have  a  perfect  right  to  con- 
sider them  such.  Hence,  where  an  agent  to  procure  and  for- 
ward applications  for  insurance,  either  by  his  direction  or 
direct  act,  makes  out  an  application  incorrectly,  notwithstand- 
ing all  the  facts  are  correctly  stated  to  him  by  the  applicant, 
the  error  is  chargeable  to  the  insurer  and  not  to  the  insured. 
Ins.  Co.  V.  Mahme,  21  Wall.  152 ;  his.  Co.  v.  Wilkinso7i,  13 
Wall.  222  ;  MalleaUe  Iron  WorAs  v.  Phoenix  Ins.  Co.,  25 
Conn.  465  ;  Hough  v.  City  Fire  Ins.  Co.,  29  Conn.  10  ;  Wood- 
iury  Savings  Banh  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517  ; 
Miner  v.  Phoenix  Ins.  Co.,  27  Wis.  693  ;  Winans  v.  AUemania 
Fi/re  Ins.  Co.,  38  Wis.  342;  Rowley  v.  Empire  Ins  Co.,  36  N. 
Y.  550  ;  Brandup  v.  St.  Paul  F.  db  M.  Ins.  Co.,  27  Minn.  393  ; 
2  Am.  Lead.  Cas.  (5th  ed.),  917  et  seq.;  Wood  on  Insurance, 
c.  12 ;  May  on  Insurance,  §  120. 

2.  After  the  courts  had  generally  established  this  doctrine, 
many  of  the  insurance  companies,  in  order  to  obviate  it, 
adopted  the  ingenious  device  of  inserting  a  provision  in  the 
policy,  that  the  application,  by  whomsoever  made,  whether  by 
the  agent  of  the  company  or  any  other  person,  shall  be  deemed 
the  act  of  the  insured  and  not  of  the  insurer.  But,  as  has  been 
well  remarked  by  another  court,  "  there  is  no  magic  in  mere 
words  to  change  the  real  into  the  unreal.  A  device  of  words 
cannot  be  imposed  upon  a  court  in  place  of  an  actuality  of 
facts."  If  corporations  are  astute  in  contriving  such  pro- 
visions, courts  will  take  care  that  they  shall  not  be  used  as 
instruments  of  fraud  or  injustice.  It  would  be  a  stretch  of 
legal  principles  to  hold  that  a  person  dealing  with  an  agent, 
apparently  clothed  with  authority  to  act  for  his  principal  in 
the  matter  in  hand,  could  be  affected  by  notice,  given  after  the 
negotiations  were  completed,  that  the  party  with  whom  he  had 
dealt  should  be  deemed  transformed  from  the  agent  of  one 
party  into  the  agent  of  the  other.     To  be  efficacious,  such  notice 


0.  VIII.     Kausal  v.  Minn.  Fakmeks'  Mct.  F.  Ins.  Asso.        395 

should  be  given  before  the  negotiations  are  completed.  The 
application  precedes  the  policy,  and  the  insured  cannot  be  pre- 
sumed to  know  that  any  such  provision  will  be  inserted  in  the 
latter.  To  hold  that,  by  a  stipulation  unknown  to  the  insured 
at  the  time  he  made  the  application,  and  when  he  relied  upon 
the  fact  that  the  agent  was  acting  for  the  company,  he  could 
be  held  responsible  for  the  mistakes  of  such  agent,  would  be  to 
impose  burdens  upon  the  insured  which  he  never  anticipated. 
Hence,  we  think  that  if  the  agent  was  the  agent  of  the  com- 
pany in  the  matter  of  making  out  and  receiving  the  applica- 
tion, he  cannot  be  converted  into  the  agent  of  the  insured  by 
merely  calling  him  such  in  the  policy  subsequently  issued. 
Neither  can  any  mere  form  of  words  wipe  out  the  fact  that  the 
insured  truthfully  informed  the  insurer,  through  its  agent,  of 
all  matters  pertaining  to  the  application  at  the  time  it  was 
made.  We  are  aware  that  in  so  holding  we  are  placing  our- 
selves in  conflict  with  the  views  of  some  eminent  courts.  But 
the  conclusion  we  have  reached  is  not  without  authority  to 
sustain  it,  and  is,  we  believe,  sound  in  principle,  and  in  accord- 
ance with  public  policy.  Wood  on  Insurance,  §  139 ;  May  on 
Insurance,  §  140  ;  Com7ne7'cial  Ins.  Co.  v.  Ives^  56  111.  402  ; 
Gans  V.  St.  Paul  F.  c&  M.  Ins.  Co.,  43  Wis.  108  ;  Columbia 
/ns.  Co.  V.  Cooler,  50  Pa.  St.  331. 

3.  It  is  contended  by  respondent  that  there  is  a  distinction 
in  this  regard  between  "  stock  "  and  "  mutual "  insurance  com- 
panies ;  that  the  difference  in  the  character  of  the  companies 
makes  a  difference  in  the  relative  duties  of  the  applicant  and 
the  company,  and  in  the  authorit}^  of  the  agents  employed ; 
that,  in  the  case  of  a  mutual  company,  the  application  is  in 
effect  not  merely  for  insurance,  but  for  admission  to  member- 
ship— the  applicant  himself  becoming  a  member  of  the  com- 
pany upon  the  issue  of  the  policy.  By  some  courts  a  dis- 
tinction in  this  respect  is  made  between  the  two  classes  of 
companies.  This  distinction  is  usually  based  upon  the  ground 
that  the  stipulations  held  binding  upon  the  insured  are  con- 
tained in  the  charter  or  by-laws  of  the  company,  and  that  a 
person  applying  for  membership  is  conclusively  bound  by  the 
terms  of  such  charter  and  by-laws.  Such  is  not  this  case,  for 
the  stipulations  claimed  to  bind  the  insured  are  only  in  the 
policy.     But,  so  far  as  concerns  the  questions  now  under  con- 


396  Insurance  :    Fire,  Life,  Marine.  o.  viit. 

sideration,  we  fail  to  see  any  distinction  between  the  two  kinds 
of  companies,  and  we  feel  confident  that  the  average  applicant 
for  insurance  is  rarely  aware  of  any.  It  is  true  that,  in  the 
case  of  a  mutual  company,  the  insured  becomes  in  theory  a 
member  of  the  company  upon  the  issue  of  the  policy.  But,  in 
applying  and  contracting  for  insuranc*?,  the  applicant  and  the 
company  are  as  much  two  distinct  persons  as  in  the  case  of  a 
stock  company,  and  we  see  no  reason  for  holding  the  agent 
who  takes  the  application  any  less  the  agent  of  the  insurer  in 
the  one  case  than  in  the  other.  The  membership  does  not 
begin  until  the  policy  is  issued.  As  to  all  previous  negotiations, 
the  agent  acts  only  for  the  com]iany.  Coluvnhia  Ins.  Co.  v. 
Cooper.,  supra  •  May  on  Insurance,  §§  139  et  seq. 

4.  Verbal  testimony  is  competent  to  show  that  the  applica- 
tion was  filled  up  by  the  agent  of  the  company,  and  that  the 
facts  were  fully  and  correctly  stated  to  him,  but  that  he,  with- 
out the  knowledge  of  the  insured,  misstated  them  in  the 
application.  This  was  not  in  violation  of  the  rule  that  verbal 
testimony  is  not  admissible  to  vary  a  written  contract.  It 
proceeds  upon  the  ground  that  the  contents  of  the  paper  were 
not  his  statement,  though  signed  by  him,  and  that  the  insur- 
ance company,  by  the  acts  of  their  agent  in  the  matter,  are 
estopped  to  set  up  that  it  is  the  representation  of  the  insured. 
Ins.  Co.  V.  Wilkinson,  sujpra ;  May  on  Insurance,  §  143,  and 
cases  cited,  note  3. 

At  the  time  the  application  for  this  insurance  was  made, 
defendant's  agent,  authorized  to  take  such  applications,  was 
personally  present  on  the  premises,  and  was  first  fully  informed 
by  the  plaintiffs  of  all  the  facts,  and  then  himself  wrote  out 
the  application,  and  told  William  Kausal  that  it  was  correct. 
William  Kausal  then  signed  it,  and  also  signed  his  wife's  name 
thereto,  upon  th^-statement  and  representation  of  the  agent 
that  such  was  the  proper  mode  of  making  the  application. 

On  this  state  of  facts,  if  the  policy  does  not  cover  the  loss, 
it  is  the  fault  of  the  defendant  and  not  of  the  plaintiffs.  It 
seems  clear  that  plaintiffs  are  not  without  remedy. 

Order  reversed 


c.  VIII.  Messelbach  v.  Norman.  397 

New   York  Court  of  Appeals,  1890. 
MESSELBACH   v.    NORMAN. 

(122  N.  Y.  578.) 

The  limitation  in  the  policy  in  respect  to  the  agent's  power  to  loaive  or  estop  it 
primtt  facie  hindin;/,  and  must  he  overcome  by  proof  of  an  actual  or  osten- 
sible authority  sufficiently  broad,  before  a  waiver  or  estoppel  can  be  estab- 
lished. 

FoLLETT,  Cn.  J. — June  9,  1883,  the  defendant  insured  the 
plaintiff  against  such  loss  or  damage,  not  exceeding  $1,500,  as 
should  be  caused  by  fire,  during  the  next  three  years,  to  a 
building  then  in  process  of  erection,  which,  when  completed, 
was  to  be  occu})ied  as  a  dwelling.  The  policy  contained,  among 
others,  the  following  provisions  : 

"  This  polic}'  shall  become  void,  unless  consent  in  writing 
is  indorsed  hereon  by  or  on  behalf  of  the  society,  in  each  of 
the  following  instances,  ...  if  any  building  hereby  insured 
be  or  become  vacant  or  unoccupied  for  the  purpose  indicated 
in  this  contract." 

The  building  was  finished  August  1,  1883,  and  thereafter 
was  occupied  as  a  dwelling  by  a  tenant  until  April  IT,  1884, 
when  he  left,  and  the  building  remained  unoccupied  until  April 
26,  1884,  w^ien  it  was  totally  destroyed  by  fire.  The  building 
was  unoccupied  wnthin  the  meaning  of  the  policy.  Ilalpin  v. 
Phenk-  Ins.  Co.,  118  N.  Y.  165.  No  written  consent  was  in- 
dorsed on  the  policy  that  it  should  continue  in  force  while  the 
building  was  unoccupied,  and  it  is  conceded  that  no  recovery 
can  be  had  unless  the  evidence  establishes  a  waiver  of  this  pro- 
vision. Undoubtedly,  a  party  to  a  contract  which  contains  a 
provision  that  it  shall  not  be  changed  except  by  a  writing 
signed  by  him  may  by  conduct  estop  himself  from  enforcing 
the  provision  against  a  ])arty  who  has  acted  in  reliance  upon 
the  conduct ;  and  so  the  acts  of  an  agent  who  possesses  the 
power  of  the  pi'incipal,  or  who  has  been  held  out  by  the  prin- 
cipal to  possess  his  power  in  respect  to  the  |)ro vision  alleged  to 
have  been  altered  or  changed,  may  also  estop  his  principal. 
But  under  a  policy  containing  a  provision  that  the  insurer 
"  shall  n(,t  l)e  bound  ...  by  any  act  of  or  statement  made 
.  .  .  by  any  agent  .  .  .  which  is  not  authorized  by  this 
policy  or  contained  therein,  or  in  any  written  paper  mentioned 


398  Insurance:    ^ire,  Life,  Marine.  c.  viii. 

therein,"  the  power  can  only  be  exercised  in  the  mode  pre- 
scribed, unless  it  is  shown  that  the  agent  possessed,  actually 
or  apparently,  the  power  of  his  principal  in  respect  to  the  pro- 
vision alleged  to  have  been  waived.  JValsk  v.  Hartford  Fire 
Ins.  Co.,  73  N.  Y.  5 ;  Marvin  v.  Universal  Life  Ins.  Co.^  85 
id.  278. 

Upon  the  question  of  waiver  the  plaintiff  testified  :  "  When 
Mrs.  Jones,  the  tenant,  moved  out  of  the  building  I  went  and 
saw  Mr.  Bennett  (the  agent  of  defendant)  right  away.  Q. 
"What  did  you  say  to  him  ?  A.  I  told  Mr.  Bennett  the  tenant 
wanted  to  go  out,  and  I  want  to  move  in  myself ;  he  said  all 
right.  .  .  .  Q.  What,  if  anything,  did  you  say  to  the  agent 
about  the  property  being  vacant,  and  about  the  policy  of  in- 
surance ?  -4.  I  told  him  the  folks  had  gone  out,  and  I  would 
go  in  a  few  days  ;  he  said  all  right ;  he  did  not  say  anything 
about  the  policy  or  the  insurance.  Bennett  told  me  when  he 
gave  me  the  policy  to  notify  him  if  the  people  were  moving 
out ;  I  did  not  say  anything  else  to  him."  The  plaintiff's  son- 
in-law  testified  :  '^  Q.  What  have  you  heard  him  (Bennett) 
say,  in  relation  to  the  policy  in  suit,  in  reference  to  Mrs.  Jones 
moving  from  the  premises?  A.  I  heard  Bennett  say,  in  Am- 
sterdam, that  he  told  plaintiff  that  he  was  going  to  have  busi- 
ness in  Schuyler  Street,  and  would  stop  and  fix  her  policy  so 
that  it  would  be  all  right,  providing  it  was  vacant ;  he  said  he 
told  her  this  the  same  da}^  she  notified  him  the  family  were 
going  to  move  out."  This  is  the  only  evidence  tending  to 
establish  a  waiver.  The  referee  did  not  find,  as  a  question  of 
fact,  that  there  was  a  waiver  of  any  of  the  provisions  of  the 
policy  ;  but  simply  found  that  the  conversations  above  quoted 
were  had,  and  decided,  as  a  question  of  law,  that  they  con- 
stituted a  valid  waiver.  This  conclusion  is  open  to  two  objec- 
tions :  (1)  It  violates  the  following  provision  of  the  policy  : 
"  The  use  of  general  terms,  or  anything  less  than  a  distinct, 
specific  agreement,  clearly  expressed  and  indorsed  on  the  policy, 
sliall  not  be  considered  as  a  waiver  of  any  printed  or  written 
condition  expressed  therein."  (2)  There  is  no  evidence  that 
Bennett  had  power  to  waive  by  conduct  cr  in  any  way,  except 
as  specified  in  the  policy,  any  of  its  provisions.  The  evidence 
in  respect  to  the  terms  of  Bennett's  agency  is  very  meager  and 
general  in  its  character.     The  plaintiff  testified  that  the  policy 


c.  VIII.         Knickerbocker  Life  Ins.  Co.  v.  Norton.  399 

was  delivered  by  '*  L3nnan  Bennett,  defendant's  agent."  The 
policy  was  countersigned  by  "  Lyman  Bennett,  agent ; "  and 
a  consent  indorsed  on  it,  when  issued,  that  the  building  be 
finished  without  extra  charge,  was  signed  "  Lyman  Bennett, 
agent,"  which  is  all  the  evidence  from  which  the  extent  of  his 
powers  can  be  ascertained.  There  is  no  finding  describing  the 
extent  of  his  powers  or  the  character  of  his  agency,  whether  it 
was  general  or  special.  Such  a  record  is  quite  insufficient  to 
justify  this  court  in  holding,  as  a  matter  of  law,  that  Bennett 
possessed  the  powers  of  the  principal  in  respect  to  the  provis- 
ions under  consideration,  or  any  powers  except  such  as  he  was 
shown  to  have  exercised.  The  burden  of  showing  that  Bennett 
possessed  the  powers  of  the  principal  was,  under  the  terms  of 
the  policy,  upon  the  plaintiff,  which  she  failed  to  sustain.  No 
legal  waiver  of  the  provision  in  respect  to  unoccupancy  having 
been  established,  the  plaintiff  was  not  entitled  to  recover. 

The  order  should  be  affirmed,  and  judgment  absolute  ren- 
dered against  the  appeUant,  with  costs. 

All  concur. 

Order  affirmed. 

United  States  Supreme  Court,  18T7. 
KNICKERBOCKER   LIFE  INS.   CO.   v.   NORTON. 

(96  U.  S.  234.) 

To  overcome  the  restriction  of  the  policy  in  respect  to  the  agent's  power  to  waive, 
an  actual  or  ostensible  authority  emanating  from  the  principal  must  be 
shown  to  exist,  and  this  depends  largely  upon  the  drcumstcmces  of  each 
case,  concerning  the  effect  of  which  judges  may  easily  differ. 

This  action  was  brought  by  Phoebe  A.  Norton  on  a  policy 
of  insurance,  issued  by  the  Knickerbocker  Life  Insurance  Com- 
pany of  New  York,  on  the  life  of  Jesse  O.  Norton,  for  the 
benefit  of  his  wife  and  children.  The  policy  contained  the  fol- 
lowing condition  :  "  If  the  said  premium  shall  not  be  paid  on 
or  before  twelve  o'clock,  noon,  on  the  day  or  days  above  men- 
tioned for  the  payment  thereof,  at  the  office  of  the  company  in 
the  city  of  New  York  (unless  otherwise  expressly  agreed  in 
writing),  or  to  agents  when  they  produce  receipts  signed  by  the 
president  or  secretary,  or  if  the  principal  of  or  interest  upon 
any  note  or  other  obligation  given  for  the  premium  upon  said 


400  Insurance  :    Firk,  Life,  Marine.  o.  viii. 

policy  shall  not  be  paid  at  the  time  the  same  shall  become  due 
and  payable,  then,  and  in  every  such  case,  the  company  shall 
not  be  liable  to  pay  the  sura  assured,  or  any  part  thereof ;  and 
said  policy  shall  cease  and  be  null  and  void." 

By  an  indorsement  on  the  policy,  it  was  declared  that 
"  agents  of  the  company  are  not  authorized  to  make,  alter,  or 
abrogate  contracts,  or  waive  forfeitures." 

The  insured  died  on  the  3d  of  August,  1875  ;  and  the  com- 
pany refused  to  pa}-  the  insurance,  on  the  ground  that  the 
policy  was  forfeited  by  reason  of  the  non-payment  of  certain 
notes  given  for  the  last  premium,  which  was  due  April  20, 
1875.  It  was  conceded  that  all  the  other  premiums  had  been 
paid. 

The  declaration,  besides  a  special  count  on  the  policy,  con- 
tained the  ordinary  money  counts.  The  defendant  pleaded  the 
general  iosue,  and,  specially,  that  the  premium  notes  were  not 
paid  at  maturity,  and  that  the  policy  thereby  became  forfeited. 
The  plaintiff  replied,  first,  that  the  agent  of  the  defendant  at 
Chicago,  regularly  authorized  by  the  defendant  so  to  do,  ex- 
tended the  time  of  payment  of  the  first  note,  which  became 
due  on  the  20th  of  June,  to  the  20th  of  July,  when  she  tendered 
the  amount  thereof  to  the  agent,  who  refused  to  receive  the 
same ;  and  that  she  also  tendered  the  amount  of  the  second 
note  at  its  maturity,  which  was  likewise  refused ;  secondly, 
that  after  the  maturity  of  the  first  note,  the  agent  of  the  de- 
fendant, regularly  authorized  so  to  do,  waived  all  advantages 
the  company  might  have  claimed  because  of  its  non-payment  at 
maturity,  and  extended  the  time  of  payment,  as  before  stated, 
with  an  averment  of  tender  and  refusal.  The  defendant,  by 
way  of  rejoinder,  denied  that  it  had  extended  the  time  of  pay- 
ment, or  that  it  had  waived  any  advantages  as  alleged.  This 
was  the  issue  at  the  trial. 

It  appeared  on  the  trial  that  the  premium  in  question  was 
settled  by  the  payment  of  $50  in  cash,  and  the  balance  in  two 
promissory  notes  given  by  Jesse  O.  Norton  to  the  insurance 
company,  payable  respectively  in  two  and  three  months,  and 
maturing,  one  on  the  20th  of  June,  the  other  on  the  20th  of 
July,  1875.  Each  note  contained  a  clause  declaring  that  if  it 
were  not  paid  at  maturity  the  policy  would  be  void — this  be- 
ing the  usual  form  of  premium  notes. 


o.  VIII.         Kniokerbockeb  Life  Ins.  Co.  v.  Norton.  401 

On  the  issue  as  to  extension  of  time  on  the  notes,  and  the 
authority  of  the  agent  to  grant  it,  the  plaintiff  produced  three 
witnesses — Randall,  agent  of  the  company  down  to  March, 
1874  ;  Frary,  his  successor,  who  was  agent  at  the  time  in  ques- 
tion ;  and  Martin  Norton,  son  of  the  insured,  who  acted  in 
behalf  of  his  father  in  reference  to  the  alleged  extension,  and 
to  the  tender  of  payment. 

The  testimony  of  these  witnesses  tended  to  show  that  for- 
merly the  company  had  allowed  their  agent  to  extend  time  on 
premium  notes  for  a  period  of  ninety  days ;  that  this  indulgence 
was  afterwards  reduced  to  sixty  days,  and  then  to  thirty;  and 
that,  at  the  period  in  question,  the  agent  was  required,  as  a 
general  thing,  to  return  the  notes  in  his  hands  if  not  paid  by 
the  15th  of  the  month  following  that  in  which  they  became 
due. 

As  to  what  took  place  with  reference  to  the  notes  in  ques- 
tion, there  is  some  conflict  in  testimony  between  Martin  Norton 
and  the  agent  Frary.  The  former  testified,  in  substance,  that 
he  called  on  the  agent,  in  behalf  of  his  father,  in  June,  1875,  a 
few  days  after  the  first  note  became  due,  and  told  him  that  his 
father  wished  it  extended  for  thirty  davs  ;  to  which  the  a^ent 
agreed — his  answer  being,  "All  right."  That  he  called  again 
on  or  about  the  8th  of  July,  to  request  an  extension  of  the 
other  note,  which  would  become  due  on  the  20th  of  that  month, 
and  a  further  extension  of  the  first  note  to  the  10th  of  Auo-ust. 
That  the  agent  said  he  would  have  to  write  to  the  company 
about  this.  That,  on  the  13th,  he  called  again,  and  told  the 
agent  that  his  father  had  concluded  to  pay  both  notes ;  and  the 
agent  gave  him  the  figures,  showing  what  was  due  on  them. 
That  he  called  again  on  the  15th,  prepared  to  pay  the  notes, 
when  he  was  informed  by  the  agent  that  he  could  not  receive 
the  money,  having  received  orders  from  the  company  to  return 
all  the  papers  to  New  York,  and  he  had  done  so.  That  he 
then  made  a  legal  tender  of  the  amount  due  on  the  first  note, 
which  was  refused.  Frary  testified  that  he  had  no  recollection 
of  the  first  interview,  or  of  agreeing  to  extend  the  first  note. 
As  to  the  rest,  they  did  not  materially  differ. 

In  addition  to  the  testimony  relating  to  the  general  p'^^actice 
of  the  agents  in  granting  extensions  of  time  for  the  payment  of 
premium    notes,   evidence    was   given    tending   to   show   that 
26 


402  Insukanoe  :   Fire,  Life,  Marine.  a  vni. 

Norton,  the  insured,  had  usually  received  more  or  less  indulgence 
of  that  kind. 

The  counsel  for  the  defendant  moved  to  strike  out  the  testi- 
mony touching  the  usages  of  the  company  as  to  non-payment 
of  prior  premium  notes  by  Norton,  and  prior  indulgence  thereon 
to  him,  as  incompetent,  and  in  conflict  with  the  terms  of  the 
policy,  and  as  showing  no  authority  in  Frary  to  give  the  al- 
leged extension  ;  which  was  without  consideration,  if  made, 
and  after  the  forfeiture  had  occurred. 

The  counsel  for  the  defendant  also  moved  to  strike  out  that 
portion  of  Martin  Norton's  testimony  relative  to  an  agreement 
for  an  extension  of  the  premium  notes,  such  agreement  being 
without  authority  on  the  part  of  the  agent,  etc.  The  court 
overruled  the  latter  motion ;  and,  as  to  the  first,  directed  the 
jury  to  disregard  so  much  of  Randall's  testimony  as  tended  to 
show  the  conduct  of  the  defendant  and  plaintiff  in  regard  to 
former  payments  ;  but  allowed  to  stand  so  much  of  Randall's 
and  Frary's  testimony  as  tended  to  show  the  powers  of  the 
agents  in  reference  to  giving  extensions  on  premiums  or  pre- 
mium notes.     This  ruling  was  excepted  to. 

In  charging  the  jury,  the  court  left  it  to  them  to  say,  from 
the  evidence,  whether  the  agent  of  the  defendant  had  power  to 
waive  a  strict  compliance  with  the  terms  of  the  agreement  as 
to  the  time  of  paying  the  notes  given  for  the  premium  ;  and,  if 
he  had  such  power,  whether  such  a  waiver  was  in  fact  made  : 
if  it  was,  and  if  the  insured  offered  to  pay  the  notes  within  the 
time  to  which  they  were  extended,  and  the  company  refused 
to  receive  payment,  that  then  the  plaintiff  was  entitled  to  re- 
cover. The  jury  were  further  instructed  that  the  power  vested 
in  Randall,  the  previous  agent,  was  only  pertinent  as  it  tended 
to  throw  light  on  the  powers  vested  in  his  successor,  Frary. 
The  defendant's  counsel  excepted  to  the  charge,  and  submitted 
several  instructions,  the  purport  of  them  being,  in  substance, 
that,  in  view  of  the  express  provisions  of  the  policy,  the  evi- 
dence was  utterly  irrelevant  and  incompetent  to  show  any 
authority  in  the  agent  to  grant  any  indulgence  as  to  the  time 
of  paying  the  notes,  and  to  waive  the  forfeiture  incurred  by 
their  non-payment  at  maturity  ;  or  to  show  that  any  valid  and 
legal  extension  was,  in  fact,  granted,  or  that  the  forfeiture  of 
the  policy  was  waived. 


0.  VIII.        Knickerbocker  Life  Ins.  Co.  v,  Norton.  403 

These  instructions  were  refused.  There  was  a  judgment 
for  the  plaintiff,  whereupon  the  company  sued  out  this  writ  of 
error. 

Mr.  Justice  Bradley,  after  stating  the  case,  delivered  the 
opinion  of  the  court. 

The  material  question  in  this  case  is,  whether,  in  view  of 
the  express  provisions  of  the  policy,  the  evidence  introduced  by 
the  assured  was  relevant  and  competent  to  show  that  the  com- 
pany  had  authorized  its  agent  to  grant  indulgence  as  to  the 
time  of  paying  the  premium  notes,  and  waive  the  forfeiture  in- 
curred by  their  non-payment  at  maturity  ;  or  to  show  that  any 
valid  extension  had,  in  fact,  been  granted,  or  the  forfeiture  of 
the  policy  waived. 

The  written  agreement  of  the  parties,  as  embodied  in  the  pol- 
icy and  the  indorsement  thereon,  as  well  as  in  the  notes  and  the 
receipt  given  therefor,  was  undoubtedly  to  the  express  purport 
that  a  failure  to  pay  the  notes  at  maturity  would  incur  a  for- 
feiture of  the  policy.  It  also  contained  an  express  declaration 
that  the  agents  of  the  company  were  not  authorized  to  make, 
alter,  or  abrogate  contracts  or  waive  forfeitures.  And  these 
terms,  had  the  company  so  chosen,  it  could  have  insisted  on. 
But  a  party  always  has  the  option  to  waive  a  condition  or  stip- 
ulation made  in  his  own  favor.  The  company  was  not  bound  t6 
insist  upon  a  forfeiture,  though  incurred,  but  might  waive  it. 
It  was  not  bound  to  act  upon  the  declaration  that  its  agents 
had  no  power  to  make  agreements  or  waive  forfeitures;  but 
might,  at  any  time,  at  its  option,  give  them  such  power.  The 
declaration  was  only  tantamount  to  a  notice  to  the  assured, 
which  the  company  could  waive  and  disregard  at  pleasure.  In 
either  case,  both  with  regard  to  the  forfeiture  and  to  the 
powers  of  its  agent,  a  waiver  of  the  stipulation  or  notice  would 
not  be  repugnant  to  the  written  agreement,  because  it  would 
only  be  the  exercise  of  an  option  which  the  agreement  left  in 
it.  And  whether  it  did  exercise  such  option  or  not  was  a  fact 
provable  by  parol  evidence,  as  well  as  by  writing,  for  the 
obvious  reason  that  it  could  be  done  without  writing. 

That  it  did  authorize  its  agents  to  take  notes,  instead  of 
money,  for  premiums,  is  perfectly  evident,  Irom  its  constant 
practice  of  receiving  such  notes  when  taken  by  them.     Thatii 


404  Insuranck;    Fikk,   Lifk,  Marine.  o.  viii, 

authorized  them  to  grant  indulgence  on  these  notes,  if  the  evi- 
dence is  to  be  believed,  is  also  apparent  from  like  practice.  It 
acquiesced  in  and  ratified  their  acts  in  this  behalf.  For  a  long 
period  it  allowed  them  to  give  an  indulgence  of  ninety  days; 
after  that,  of  sixty ;  then  of  thirty  days.  It  is  in  vain  to  con- 
tend  that  it  gave  them  no  authority  to  do  this,  when  it  con- 
stantlv  allowed  them  to  exercise  such  authority,  and  always 
ratified  their  acts,  notwithstanding  the  language  of  the  written 
instruments. 

We  think,  therefore,  that  there  was  no  error  committed  by 
the  court  below  in  admitting  evidence  as  to  the  practice  of  the 
company  in  allowing  its  agents  to  extend  the  time  for  payment 
of  premiums,  and  of  notes  given  for  premiums,  as  indicative  of 
the  power  given  to  those  agents ;  nor  any  error  in  submitting 
it  to  the  jury,  upon  such  evidence,  to  find  whether  the  defend- 
ant had  or  had  not  authorized  its  agent  to  make  such  exten- 
sions, nor  in  submitting  it  to  them  to  say  whether,  if  such 
authority  had  been  given,  an  extension  was  made  in  this  case. 

Much  stress,  however,  is  laid  on  the  fact  that  the  extension 
claimed  to  have  been  given  in  this  case  was  not  given,  or  applied 
for,  until  after  the  first  note  became  due  and  the  forfeiture  had 
been  actually  incurred.  But  we  do  not  deem  this  to  be  mate- 
rial. The  evidence  does  not  show  that  any  distinction  was 
inade  in  granting  extensions  before  or  after  the  maturity  of 
the  notes.  The  material  question  is,  whether  the  forfeiture 
was  waived ;  and  we  see  no  reason  why  this  may  not  be  done 
as  well  by  an  agreement  made  for  extending  the  note  after  its 
maturity,  as  by  one  made  before.  In  either  case,  the  legal 
effect  of  the  indulgence  is  this :  the  company  say  to  the  insured, 
Pay  your  note  by  such  a  time,  and  your  policy  shall  not  be  for- 
feited. If  the  insured  agrees  to  do  this,  and  does  it,  or  tenders 
himself  ready  to  do  it,  the  forfeiture  ought  not  to  be  exacted. 
In  both  cases,  the  parties  mutually  act  upon  the  hypothesis  of  the 
continued  existence  of  the  policy.  It  is  true,  if  the  agreement 
be  made  before  the  note  matures  and  before  the  forfeiture  is 
incurred,  it  would  be  a  fraud  upon  the  assured  to  attempt  to 
enforce  the  forfeiture,  when,  relying  on  the  agreement,  he  per- 
mits the  original  day  of  payment  to  pass.  On  the  other  hand, 
if  the  agreement  be  made  after  the  note  matures,  such  agree- 
ment is  itself  a  recognition,  on  the  company's  part,  of  the  con- 


0.  Till.         Knickerbocker  Life  Ins.  Co.  v.  Norton.  405 

tinued  existence  of  the  policy,  and,  consequently,  of  its  election 
to  waive  the  forfeiture.  It  is  conceded  that  the  acceptance  of 
payment  has  this  effect ;  and  we  do  not  see  why  an  agreement 
to  accept,  and  a  tender  of  payment  according  to  the  agreement, 
should  not  have  the  same  effect.  Both  are  acts  equally  demon- 
strative of  the  election  of  the  company  to  waive  the  forfeiture 
of  the  policy.  Grant  that  the  promise  to  extend  the  note  is 
without  consideration,  and  not  binding  on  the  company — which 
is  perhaps  true  as  well  when  the  promise  is  made  before  matu- 
rity as  when  it  is  made  afterwards — still  it  does  not  take  from 
the  company's  act  the  legitimate  effects  of  such  act  upon  the 
forfeiture  of  the  policy.  Perhaps  the  note  might  be  sued  on 
in  disregard  of  the  extension ;  but  if  it  could  be,  that  would 
not  annihilate  the  fact  that  the  company  elected  to  waive  the 
forfeiture  by  entering  into  the  transaction.  If  it  should  repu- 
diate its  agreement,  it  could  not  repudiate  the  waiver  of  the 
forfeiture,  without  at  least  giving  to  the  assured  reasonable 
notice  to  pay  the  money. 

Forfeitures  are  not  favored  in  the  law.  They  are  often  the 
means  of  great  oppression  and  injustice.  And,  where  adequate 
compensation  can  be  made,  the  law  in  many  cases,  and  equity 
in  all  cases,  discharges  the  forfeiture,  upon  such  compensation 
being  made.  It  is  true,  we  held  in  Statharmus  Case,  93  U.  S. 
24,  that,  in  life  insurance,  time  of  payment  is  material,  and 
cannot  be  extended  by  the  courts  against  the  assent  of  the 
company.  But  where  such  assent  is  given,  the  courts  should 
be  liberal  in  construing  the  transaction  in  favor  of  avoiding  a 
forfeiture. 

The  case  of  leases  is  not  without  analogy  to  the  present. 
It  is  familiar  law,  that,  when  a  lease  has  become  forfeited,  any 
act  of  the  landlord  indicating  a  recognition  of  its  continuance, 
such  as  distraining  for  rent,  or  accepting  rent  which  accrued 
after  the  forfeiture,  is  deemed  a  waiver  of  the  condition. 

In  Doe  V.  Meux,  4  Barn.  &  Cress.  606,  there  was  a  general 
covenant  to  repair,  and  a  special  covenant  to  make  specific 
repairs  after  three  months'  notice;  and  a  condition  of  forfeiture 
for  non-performance  of  covenants.  The  landlord  gave  notice 
to  the  tenant  to  make  certain  specific  repairs  within  three 
months.  This  was  held  a  waiver  of  the  forfeiture  already 
incurred  under  the  general   covenant.     Justice  Bailey  said: 


406  Insurance  :    Fike,   Life,   Marine.  c.  viil 

"  The  landlord,  in  this  case,  had  an  option  to  proceed  on  either 
covenant ;  and,  after  giving  notice  to  repair  within  three  months, 
he  might  have  brouglit  an  action  against  the  defendant  upon 
the  former  covenant,  lor  not  keeping  the  premises  in  repair. 
But  that  is  very  different  from  insisting  upon  the  forfeiture. 
...  I  think  that  the  notice  amounted  to  a  declaration  that 
he  would  be  satisfied  if  the  premises  were  repaired  within  three 
months,  and  that  he  thereby  precluded  himself  from  bringing 
an  ejectment  before  the  expiration  of  that  period." 

In  Doe  V.  Birch,  1  Mee.  ik  W.  402,  there  was  a  covenant  on 
the  part  of  the  tenant  to  make  certain  improvements  on  the 
premises  within  three  months,  or  that  the  lease  should  be  void. 
He  failed  to  make  the  improvements  in  the  manner  stipulated ; 
and,  after  the  expiration  of  the  three  months,  the  landlord's  son, 
on  his  father's  behalf,  made  a  demand  of  a  quarter's  rent.  But, 
it  not  appearing  that  the  landlord  knew  of  the  tenant's  failure 
with  regard  to  the  improvements,  it  was  held  that  the  son  had 
not  sufficient  authority  to  waiv^e  the  forfeiture.  Otherwise,  it 
seems,  that  the  demand  of  the  rent  would  have  amounted  to  a 
waiver.  Baron  Parke  referred  to  Greenes  Case,  1  Croke,  3, 
where  calling  the  party  a  tenant,  in  a  receipt  for  b3'gone  rent, 
was  held  to  be  sufficient  evidence  of  a  waiver,  though  the  ac- 
ceptance of  that  i-ent  was  not  such.  And  he  adds :  "  If  it  had 
been  proved  that  the  father  had  notice  of  the  alterations,  and 
he  had  still  allowed  the  son  to  receive  the  rent,  the  forfeiture 
might  have  been  waived.  But  that  was  not  proved ;  and  the 
question  of  waiver  does  not,  therefore,  distinctly  arise  in  the 
case.  If  it  had,  the  authorities  cited  show  that  this  was  a  lease 
voidable  at  the  election  of  the  landlord.  Then,  I  think  that  an 
absolute,  unqualified  demand  of  rent,  by  a  person  having  suffi- 
cient authority,  would  have  amounted  to  a  waiver  of  the  for- 
feiture, and  it  would  have  been  like  the  case  I  cited  from 
Croke's  Reports." 

In  Wai'd  V.  Day,  4  Best  &  Smith,  335,  after  a  forfeiture  of 
a  license  to  gather  minerals  off  of  a  manor  had  been  incurred, 
the  landlord  entered  into  negotiations  with  the  licensee  and 
his  son,  to  grant  to  the  latter  a  renewal  of  the  license  when  it 
should  expire;  and  terms  were  agreed  on,  which  the  landlord 
afterwards  refused  to  carry  out.  It  was  held,  that,  by  enter- 
ing into  these  negotiations,  he  waived  the  forfeiture  of  the 


C.  VIII.         Knickerbockkk  Like  Ins.  C'o.  v.  IS'orton.  4Dt 

(original  license.  The  negotiations  assumed  that  the  original 
license  Was  to  continue  to  its  termination.  The  exaction  of 
the  forfeiture  was  in  the  landlord's  election ;  and  he  evinced 
his  election  not  to  enforce  it  by  entering  into  the  negotiations; 
Justice  Blacliburn  says :  '*  Most  of  the  cases  in  which  the  doc- 
trine of  election  has  been  discussed  have  been  cases  of  landloru 
and  tenant  under  a  regular  lease,  in  which  has  been  reserved 
a  right  of  re-entry  for  a  forfeiture — that  is,  an  option  to  deter- 
mine the  lease  for  a  forfeiture;  but  this  doctrine  is  notj  as  Mr. 
Russell  seems  to  think,  confined  to  such  cases.  So  far  froiri 
tliat  being  so,  the  doctrine  is  but  a  branch  of  the  general  law, 
that,  where  a  man  has  an  election  or  option  to  enter  into  an 
estate  vested  in  another,  or  to  deprive  another  of  some  exist- 
ing right,  before  he  acts  he  must  elect,  once  for  all,  whether 
he  will  do  the  act  or  not.  He  is  allowed  time  to  make  up  his 
mind ;  but  when  once  he  has  determined  that  he  will  not  con- 
sider the  estate  or  lease — whichever  it  may  be — void,  he  has 
not  any  further  option  to  change  his  mind."  And  then  the 
learned  judge  cites  authorities,  going  back  to  the  Year  Books, 
to  show  that  a  determination  of  a  man's  election  in  such  cases 
may  be  made  by  express  words  or  by  act ;  and  that  if,  by  word 
or  by  act,  he  determines  that  the  lease  shall  continue  in  exist- 
ence, and  communicates  that  determination  to  the  other  party, 
he  has  elected  that  the  other  shall  go  on  as  tenant. 

These  cases  show  the  readiness  with  which  courts  seize  hold 
of  any  circumstances  that  indicate  an  election  or  intent  to 
wa've  a  forfeiture.  We  think  that  the  present  case  is  within 
the  reason  of  these  authorities ;  and  that  the  objection,  that 
the,  note  was  already  past  due  when  the  agreement  to  extend 
it  was  made,  is  not  sufficient  to  prevent  said  agreement  from 
operating  as  a  waiver  of  the  forfeiture. 

We  find  no  error  in  the  record,  and  the  judgment  of  the 
Circuit  Court  is 

Affirmed. 

Mr.  Justice  Swayne,  Mr.  Justice  Field,  and  Mr.  Justiok 
Strong  dissented. 

Mb.  Justice  Strong.  I  dissent  from  the  judgment  given 
in  this  case.     The  insurance  effected  by  the  policy  became  for- 


408  Insurance  :    Fire,  Life,  Marine.  c.  viii. 

feited  by  the  non-payment  ad  diem  of  the  premium  note.  The 
poHcy  then  ceased  to  be  a  binding  contract.  It  was  so  ex- 
pressly stipulated  in  the  instrument.  Admitting  that  the  com- 
pany could  afterwards  elect  to  treat  the  policy  as  still  in  force, 
or,  in  other  words,  could  waive  the  forfeiture,  the  local  agent 
could  not,  unless  he  was  so  authorized  by  his  principals.  The 
policy  declared  that  agents  should  not  have  authority  to  make 
such  waivers.  And  there  is  no  evidence  in  this  case  that  the 
company  gave  to  the  agent  parol  authority  to  waive  a  forfeit- 
ure after  it  had  occurred.  They  had  ratified  his  acts  extend- 
ing the  time  of  payment  of  premium  notes,  when  the  extension 
was  made  before  the  notes  fell  due.  But  no  practice  of  the 
company  sanctioned  any  act  of  its  agent  done  after  a  policy 
had  expired,  by  which  new  life  was  given  to  a  dead  contract. 

Connecticut  Supreme  Court  op  Errors,  1874. 
RYAN"  V.  WORLD   MUTUAL  LIFE   INS.   CO. 

(41  Conn.  168.) 

R  is  prima  facie  negligence  for  the  applicant  to  omit  to  read  the  application 
which  he  signs,  and  thin  presumption  is  conclusive,  unless  overcome  by 
proper  evidence. 

Carpenter,  J. — This  is  an  action  on  a  policy  of  life  insur- 
ance. The  policy  is  expressed  to  be  "  in  consideration  of  the 
representations,  declarations  and  covenants  contained  in  the 
application  therefor,  to  which  reference  is  here  made  as  a  part 
of  this  contract,  etc."  It  is  further  declared  that  "  This  policy 
is  issued  and  accepted  on  the  following  express  conditions  and 
agreements :  First.  That  the  statements  and  declarations  made 
in  the  application  therefor,  and  on  the  faith  of  which  it  is 
issued,  are  in  all  respects  true,  etc."  The  application,  there- 
fore, is  a  part  of  the  policy ;  and  the  plaintiff's  agreements 
therein  contained  are  warranties,  and,  if  not  true,  she  cannot 
recover,  unless  there  has  been  a  waiver  by  the  defendants,  or 
under  the  circum^^tances  they  are  estopped  from  denying  their 
truth. 

In  the  application  ai :  the  following  questions  and  answers : 

"  12.  Has  the  party  ever  had  any  of  the  following  diseases 

[naming  a  long  list  of  diseases,  and  among  them]  :    bronchi- 


a  vin.  Ryan  v.  Wokld  Mutual  Life  Ins.  Co.  409 

tis,  consumption,  spitting  of  blood,  or  any  serious  disease  ? " — 
"  None  of  these." 

'"  17.  Has  the  party  had  during  tne  last  seven  years  any- 
severe  sickness  or  disease  ?  If  so,  state  tlie  particulars,  and  the 
name  of  the  attending  physician  who  was  consulted  and  pre- 
scribed."—" No." 

"  25.  Has  the  party  employed  or  consulted  any  physician  ? 
Please  answer  this  yes  or  no.  If  yes,  give  name  or  names  and 
residence." — "  No." 

"  27.  Has  any  previous  examination  or  application  been 
made  for  assurance  on  the  life  proposed  ? " — "  No." 

'•  Has  any  company  declined  to  issue  a  policy  for  the  party  ? " 
— "  No." 

Upon  the  trial  the  plaintiff-  offered  to  prove,  not  that  the 
above  answers  were  true,  but  that  different  answers  were  in 
fact  given,  both  by  herself  and  the  insured,  and  that  the  an- 
swers were  wrongly  written  by  the  local  agent  of  the  defend- 
ants without  the  knowledge  or  consent  of  the  plaintiff  or  her 
husband.  Aside  from  the  claim  that  the  defendants  are  re- 
sponsible for  the  conduct  of  their  local  agent,  this  is  merely  an 
attempt  to  substitute  for  a  part  of  the  written  contract  declared 
on,  a  different  parol  contract ;  for  the  representations  and  war- 
ranties of  the  plaintiff  contained  in  the  written  agreement,  oral 
representations  and  warranties  of  an  entirely  different  charac- 
ter.    It  requires  no  argument  to  show  that  this  cannot  be  done. 

But  the  plaintiff  claims  that  truthful  answers  having  been 
given  to  each  interrogatory,  and  the  incorrect  answers  con- 
tained in  the  application  being  there  by  the  sole  act  of  the 
agent,  the  defendants  are  bound  by  the  answers  as  written,  and 
are  precluded  from  denying  their  truth.  Whether  this  is  so  or 
not  depends  upon  the  extent  of  the  agent's  authority. 

It  must  be  admitted  that  the  express  authority  of  the  agent 
was  limited  to  receiving  the  application,  forwarding  it  to  the 
home  office,  receiving,  countersigning,  and  delivering  the  policy 
and  collecting  the  premiums.  The  courts  in  this  State  have 
construed  the  powers  of  these  agents  liberally,  and  extended 
them  somewhat  by  implication.  Thus  it  has  been  held  that  in 
vvriting  the  application,  and  explaining  the  interrogatories  and 
^,he  meaning  of  the  terms  used,  he  is  to  be  regarded  as  the 
agent  of  the  company. 


410  Insurance  :   Fire,  Life,  Marink.  o.  nil 

In  this  case  we  are  asked  to  go  further  than  any  case  has 
yet  gone,  and  clothe  the  agent  with  an  authority  not  given 
him  in  fact,  and  to  hold  the  principal  responsible  for  an  act 
which  could  not  by  any  possibility  have  been  contemplated  as 
being  within  the  scope  of  the  agency.  In  most,  if  not  in  all. 
of  the  cases  in  which  the  act  of  the  agent  has  been  regarded 
as  the  act  of  the  principal,  the  act  has  been  the  natural  and 
probable  result  of  the  relations  existing  between  the  parties. 
or  so  connected  with  other  acts  expressly  authorized  as  to 
afford  a  reasonable  presumption  that  the  principal  intended  to 
authorize  it.  But  it  cannot  be  supposed  that  these  defendants 
intended  to  clothe  this  agent  with  authority  to  perpetrate  a 
fraud  upon  themselves.  That  he  deliberately  intended  to 
defraud  them  is  manifest.  He  well  knew  that  if  correct  an- 
swers were  given  no  policy  would  issue.  Prompted  by  some 
motive  he  sought  to  obtain  a  policy  by  means  of  false  answers. 
His  duty  required  him  not  only  to  write  the  answers  truly  as 
given  by  the  applicant,  but  also  to  communicate  to  his  princi- 
pal any  other  fact  material  to  the  risk  which  might  come  to 
his  knowledge  from  any  other  source.  His  conduct,  in  this 
case,  was  a  gross  violation  of  duty,  in  fraud  of  his  principal, 
and  in  the  interest  of  the  other  party.  To  hold  the  principal 
responsible  for  his  acts,  and  assist  in  the  consummation  of  the 
fraud,  would  be  monstrous  injustice.  When  an  agent  is  appar- 
ently acting  for  his  principal,  but  is  really  acting  for  himself, 
or  third  persons,  and  against  his  principal,  there  is  no  agency 
in  respect  to  that  transaction,  at  least  as  between  the  agent 
himself  or  the  person  for  whom  he  is  really  acting  and  the 
principal. 

The  principal  reason  urged  for  holding  the  defendants 
liable  in  this  case  is  the  one  suggested  in  the  argument,  that 
when  one  of  two  innocent  persons  must  suffer  by  the  fraud, 
negligence,  or  unauthorized  act  of  a  third,  he  who  clothed  the 
third  with  the  power  to  deceive  or  injure  must  be  the  one. 

Our  answer  is,  in  the  first  place,  that  this  is  not  exactly  a 
case  in  which  one  of  two  innocent  persons  must  necessarily 
suffer.  There  is  no  absolute  loss  for  us  to  determine  on  whom 
it  shall  fall.  If  the  plaintiff  fails  to  recover  she  sustains  no 
pecuniary  loss,  except  the  premium  paid,  nor  that  even  if  she 
is  innocent  and  the  law  is  so  that  she  can  recover  it  back  on 


0.  VIII.  Ryan  v.  World  Mutual  Life  Ins.  Co.  411 

the  ground  that  there  was  a  failure  of  consideration.  It  is 
unlike  a  case  of  fire  insurance.  Nearly  all  property  may  be 
insured  at  some  rate,  if  not  in  one  office  in  another.  But  in 
this  case  the  plaintiff's  husband  was  not  an  insurable  subject. 
His  situation  was  such  that  one  company  had  rejected  him,  and 
but  for  the  aid  of  fraud  neither  this  nor  any  other  company 
would  have  accepted  him.  Had  the  truth  been  stated  no  policy 
would  have  issued,  and  as  she  would  have  had  no  better  success 
probably  with  other  companies  we  cannot  see  that  she  has 
been  misled  to  her  prejudice  except  in  relation  to  the  premium, 
which  is  comparatively  a  small  matter. 

In  the  second  place,  if  the  rule  is  to  be  applied  to  this  case 
it  is  by  no  means  certain  that  it  will  aid  the  plaintiff.  The 
fraud  could  not  be  perpetrated  by  the  agent  alone.  The  aid  of 
the  plaintiff  or  the  insured,  either  as  an  accomplice  or  as  an 
instrument,  was  essential.  If  she  was  an  accomplice,  then  she 
participated  in  the  fraud,  and  the  case  falls  within  the  principle 
of  Lewis  V.  The  Phoenix  Mutual  Life  Ins.  Co..,  39  Conn.  100. 
If  she  was  an  instrument,  she  was  so  because  of  her  own  negli- 
gence, and  that  is  equally  a  bar  to  her  right  to  recover.  She 
says  that  she  and  her  husband  signed  the  application  without 
reading  it  and  without  its  being  read  to  them.  That  of  itself 
was  inexcusable  negligence.  The  application  contained  her 
agreements  and  representations  in  an  important  contract. 
When  she  signed  it  she  was  bound  to  know  what  she  signed. 
The  law  requires  that  the  insured  shall  not  only,  in  good  faith, 
answer  all  the  interrogatories  correctly,  but  shall  use  reason- 
able diligence  to  see  that  the  answers  are  correctly  written.  It 
is  for  his  interest  to  do  so,  and  the  insurer  has  a  right  to  pre- 
sume that  he  will  do  it.  He  has  it  in  his  power  to  prevent  this 
species  of  fraud  and  the  insurer  has  not. 

Courts  should  never  extend  by  implication  the  power  of  an 
agent  except  to  carry  into  effect  the  probable  intention  of  the 
parties,  or  to  prevent  third  persons  dealing  with  the  agent  from 
being  misled  to  their  injury.  In  this  case  there  is  no  ground 
for  the  supposition  that  the  defendants  ever  intended  to  author- 
ize the  agent  to  act  directly  contrary  to  their  interests  ;  and  if 
the  plaintiff  has  been  deceived,  her  own  negligence  at  least 
materially  contributed  to  it. 

We  need  not  enlarge  upon  the  evils  necessarily  resulting 


412  Insurance  :    Fihk,  Life,  Marine.  o.  viii. 

from  holding  msurance  companies  lial)le  for  such  acts  of  their 
agents.  The  question  is  vital  to  the  insurance  interests  of  the 
country.  The  insured  no  less  than  the  insurers  are  deepl}'' 
interested  in  it.  If  this  verdict  is  sustained  it  will  tend  to 
establish  a  principle  fraught  only  with  mischief.  Every  life 
insurance  company  in  this  country,  and  to  some  extent  the  fire 
insurance  companies,  will  be  at  the  mercy  of  their  agents.  A 
door  will  be  open  to  fraud,  collusion,  and  legal  robbery,  unpre- 
cedented in  the  history  of  jurisprudence.  In  view  of  the  probable 
consequences  of  such  a  principle — evils  co-extensive  almost  with 
the  magnitude  of  the  interests  involved — we  ought  to  pause 
and  consider  well  before  extending  the  doctrine  of  some  of  the 
modern  cases  to  a  case  like  this. 

We  are  constrained  therefore  to  hold  that  a  limited  agency 
in  a  case  of  life  insurance  will  not  be  extended  by  operation  of 
law  to  an  act  done  by  the  agent  in  fraud  of  his  principal,  and 
for  the  benefit  of  the  insured,  especially  where  it  is  in  the 
power  of  the  insured  by  the  use  of  reasonable  diligence  to 
defeat  the  fraudulent  intent. 

The  court  very  properly  instructed  the  jury  that  "  an  untrue 
or  fraudulent  statement  or  denial  made  by  the  applicant  of  a 
fact  material  to  the  risk  to  induce  the  issuance  of  a  pohcy  will 
prevent  the  policy  from  taking  effect  as  a  valid  contract,  unless 
the  insurer  has  in  some  way  waived  or  estopped  himself  from 
relying  u|>on  such  mistatement  to  avoid  the  policy.  This 
waiver,  t(j  Ije  effectual,  must  be  made  by  an  officer  of  the  com- 
pany authorized  to  make  it.  If  there  has  been  no  evidence  of 
any  waiver  except  by  a  medical  examiner  of  the  company,  or  by 
a  local  agent,  there  must  be  additional  proof  of  specific  author- 
ity given  them,  or  the  company  will  not  be  bound." 

Some  of  the  cases  cited  by  the  plaintiff  are  cases  of  fire 
insurance,  in  which  the  agents  were  intrusted  with  blank  poli- 
cies, signed  by  the  president  and  secretary,  and  had  full  power 
to  fill  up  and  issue  the  same  without  referring  the  application 
to  the  home  office.  In  such  cases  the  corporation  contracts 
solely  by  its  agent.  The  acts  and  knowledge  of  the  agent  are 
the  acts  and  knowledge  of  the  corporation,  and  there  is  a 
manifest  propriety  in  holding  the  corporation  liable  accord- 
ingly. 

This  court  has  held  that  in  writing:   the  answers   to   the 


0.  VIII.  Ryan  v.  World  Mutual  Life  Ins.  Co.  413 

interrogatories  in  the  application,  the  agent  is  to  be  regarded 
as  the  agent  of  the  company  rather  than  the  agent  of  the 
insured.  We  do  not  question  the  propriety  of  those  decisions, 
considering  the  circumstances  of  the  cases  in  which  they  were 
made ;  but  we  cannot  regard  them  as  estabhshing  an  inflexible 
rule  of  law  applicable  to  all  cases. 

A  brief  reference  to  some  of  the  cases  will  illustrate  the 
distinction  which  we  make.  When  the  applicant  stated  fully 
and  truthfully  the  circumstances  relating  to  the  title  to  the 
property  insured,  and  the  agent,  knowing  all  the  facts,  but  for 
the  sake  of  convenience,  stated  the  title  incorrectly  and  issued 
a  policy,  it  was  held  that  the  company  could  not  take  advan- 
tage of  it.  The  court  regarded  the  transaction  as  equivalent 
to  an  agreement  that,  for  the  purpose  of  the  insurance,  the 
title  should  be  considered  as  it  was  stated  to  be  by  the  agent. 
Peck  V.  New  London  County  MutuaJ  Ins.  Co.,  22  Conn.  575. 
See  also  Woodbury  Savings  Banh  v.  Charter  Oak  Ins.  Co., 
31  Conn.  517. 

When  the  applicant  answered  the  interrogatory,  "  Is  a 
watch  kept  on  the  premises  during  the  night? "  by  stating  the 
facts,  and  the  agent  wrote  the  answer,  "  Watchman  till  12 
o'clock,"  which  answer  was  not  strictly  true,  it  was  held  that 
the  company  was  bound  by  it.  Malleable  Iron  Works  v. 
Phcenix  Ins.  Co.,  25  Conn.  465.  See  also  Beebe  v.  Hartford 
County  Mxit.  Fire  Ins.  Co.,  25  Conn.  51 ;  Hough,  v.  City  Fire 
Ins.  Co.,  29  Conn.  10. 

The  case  before  us  is  a  case  of  life  insurance.  The  power 
of  the  agent  was  in  fact  limited.  He  had  no  power  to  issue 
policies.  The  terms  of  his  agency  conferred  no  authority  to 
waive  conditions  or  forfeitures,  or  to  agree  to  false  and  fraudu- 
lent answers  to  any  of  the  interrogatories,  or  to  make  any 
other  contract  to  bind  the  company.  Presumptively  the  in- 
sured and  the  plaintiff  knew  all  this  before  paying  the  premium  ; 
for  the  printed  policy,  which  was  in  their  hands  for  several 
days,  contained  at  the  bottom  this  note :  "  The  president  and 
secretary  of  the  company  are  alone  authorized  to  make,  alter 
or  discharge  contracts,  or  to  waive  forfeitures."  The  jury  then 
were  correctly  told  that  "  there  must  be  additional  proof  of 
special  authority  given  them,"  (the  local  ygent  and  the  medical 
examiner,)  "  or  the  company  will  not  be  bound," 


414  Insurance  :    Fire,  Life,  Marine.  o.  vin. 

The  jury  found  such  special  authority.  But  we  look  through 
the  record  in  vain  to  find  any  evidence  to  support  such  a 
finding. 

The  verdict  was  manifestly  against  the  evidence,  and  justice 
requires  that  it  should  be  set  aside  and  a  new  trial  awarded. 


<;HAPTEE  IlL 

GENERAL  PRINOIPLES :    MAKINB. 

CouBT  OF  Exchequer,  1839. 
DIXON  V.   SADLER. 

(5  M.  &  W.  405.) 
Warranty  of  aeaworthineu. 

Assumpsit  on  a  policy  of  insurance,  dated  the  22d  of  Jano- 
ary,  1838,  on  the  ship  John  Gook^  and  cargo,  at  and  from  the 
17th  of  January,  1838,  until  the  17th  of  July,  1838,  at  noon,  in 
port  and  at  sea,  at  all  times  and  in  all  places,  being  for  the 
space  of  six  calendar  months. 

The  declaration  averred  the  loss  of  the  ship  to  have  taken 
place  on  the  19th  of  May,  1838,  by  perils  of  the  sea.  The 
defendant  pleaded,  first,  that  the  vessel  was  not  lost  by  the 
perils  of  the  sea;  secondly,  the  following  special  plea  :  "  That, 
though  true  it  is  that  the  said  vessel  was  by  the  perils  of  the  sea 
wrecked,  broken,  damaged,  and  injured,  and  became  and  was 
wholly  lost  to  the  plaintiffs,  for  plea,  nevertheless,  the  defend- 
ant says  that  the  said  wrecking,  breaking,  damaging,  and 
injuring  the  said  vessel,  and  the  loss  of  the  same  by  the  perils 
of  the  sea,  as  in  the  said  first  count  mentioned,  was  occasioned 
wholly  by  the  willful,  wrongful,  negligent,  and  improper  con- 
duct (the  same  not  being  barratrous)  of  the  master  and  marin- 
ers of  the  said  ship,  whilst  the  said  ship  was  at  sea,  as  in  the 
said  first  count  mentioned,  and  before  the  same  was  wrecked, 
broken,  damaged,  injured,  or  lost,  as  therein  mentioned,  to  wic  : 
on  the  19th  of  May,  1838,  by  willfully,  wrongfully,  negli- 
gently, and  improperly  (but  not  barratrously)  throwing  over- 
board so  much  of  the  ballast  of  the  said  ship,  that  by  means 
thereof  she  then  became  and  was  top-heavy,  crank,  unfit  to 


416  Insurance  :    Fire,  Life,  Marine.  o.  ix 

carry  sail,  and  wholly  unseaworthy,  and  unfit  and  unable  to 
endure  and  encounter  the  perils  of  the  sea  which  she  might  and 
would  otherwise  have  been  able  to  have  safely  encountered  and 
endured  ;  and  by  means  and  in  consequence  of  the  said  willful, 
wrongful,  negligent,  and  improper  (but  not  barratrous)  conduct 
of  the  said  master  and  mariners,  the  said  ship  became  and  was 
wrecked,  broken,  damaged,  injured,  and  lost  by  the  perils  of 
the  sea,  which  perils,  but  for  the  said  conduct  of  the  said  master 
and  mariners,  she  could  and  would  have  safely  encountered  and 
overcome  without  being  so  wrecked,  broken,  damaged,  injured, 
and  lost,  as  in  the  said  first  count  is  mentioned." 

The  plaintiflF  replied,  "  That  the  said  wrecking,  breaking, 
damaging,  injuring  the  said  vessel,  or  the  loss  of  the  same  by 
the  perils  of  the  sea,  as  in  the  first  count  mentioned,  was  not 
so  occasioned  by  such  conduct  of  the  master  or  mariners  of  the 
said  ship,  in  manner  and  form  as  in  the  said  plea  is  alleged," 
etc. 

At  the  trial  before  Parke,  B.,  at  the  last  Spring  Assizes  for 
Northumberland,  it  appeared  that  the  plaintiff  was  a  ship- 
owner residing  at  Sunderland,  and  was  the  owner  of  the  John 
Cook,  and  had  effected  the  policy  in  question  with  the  defend- 
ant, an  underwriter  at  Lloyd's.  The  vessel  left  Rotterdam  for 
iSunderland  properly  ballasted  and  equipped  on  the  15th  of 
May,  and  arrived  on  the  19th  of  May  opposite  a  point  called 
Seaham,  which  w^as  about  four  miles  from  the  port  of  Sunder- 
land. On  arriving  there,  and  having  a  pilot  on  board,  the 
master  commenced  heaving  part  of  the  ballast  overboard,  as 
was  proved  to  be  usual  on  such  occasions.  Whilst  this  was 
going  on  the  vessel  drifted  to  the  northward,  and  a  strong 
squall  coming  on,  the  vessel  drifted  to  the  southeast,  the  ship 
was  upset  on  her  broadside,  and  her  masts  lay  on  the  water. 
Every  endeavor  was  made  to  right  her,  but  in  vain.  She 
afterwards  sank,  off  Eyhope,  drifted  on  shore,  and  became  a 
total  wreck.  If  the  crew  had  not  removed  the  ballast,  the  ship 
would  most  likely  have  stood  the  squall.  It  was  objected  at 
the  trial  that  this  was  not  a  risk  wliich  the  underwriter  had 
undertaken  to  indemnify  against.  The  learned  judge  was  of 
opinion  that  the  word  "  willful "  in  the  plea  meant  that  the 
ballast  was  knowingly  thrown  overboard,  and  in  a  negligent 
manner,  but  said  he  would  reserve  that  question  for  the  opinion 


D,  IX.  Dixon  v.  Sadler.  417 

of  the  court.  And  his  Lordship  left  two  questions  to  the  jury : 
First,  was  it  negligent  conduct  to  throw  the  ballast  overboard 
before  arriving  in  harbor?  Secondly,  did  they  think  the  mas- 
ter exercised  a  reasonable  discretion  in  throwing  overboard  ? 
They  found,  as  to  the  first  question,  that  they  did  think  it 
negligent  generally  to  throw  over  the  ballast  ;  secondly,  that 
the  master  did  right,  supposing  the  practice  itself  authorized 
him.  A  verdict  was  thereupon  entered  for  the  defendant  on 
the  second  issue,  the  learned  judge  giving  the  plaintitf  liberty 
to  move  to  enter  a  verdict  on  that  issue,  if  the  Court  should  be 
of  opinion  that  his  construction  of  the  meaning  of  the  word 
"  wilful,"  as  used  in  the  plea,  was  incorrect. 

Pakke,  B. — In  this  case  the  defendant,  to  a  declaration 
upon  a  time  policy  for  six  months,  stating  a  loss  b}^  perils  of 
the  seas,  pleaded  three  pleas,  on  each  of  which  issue  was  joined. 
On  the  first  and  third,  the  verdict  was  found  for  the  plaintiff  ; 
on  the  second,  for  the  defendant.  This  plea  stated,  '*  that, 
though  the  vessel  was  lost  by  perils  of  the  sea,  yet  that  such 
loss  was  occasioned  wholly  by  the  willful,  wrongful,  negligent, 
and  improper  conduct  of  the  master  and  mariners  of  the  ship, 
by  willfully,  wrongfully,  negligentl}^  and  improperly  throwing 
overboard  so  much  of  the  ballast  that  the  vessel  became  un- 
sea worthy,  and  was  lost  by  the  perils  of  the  sea,  which  other- 
wise she  would  have  safely  encountered  and  overcome."  On  a 
motion  for  a  judgment  non  obstante  veredicto^  it  occurred  to 
the  court  to  be  questionable  whether  the  plea  was  not  at  all 
events  bad,  inasmuch  as  the  terms  of  it  did  not  exclude  the 
case  of  a  loss  by  barratry,  for  which  the  underwriters  would  be 
clearly  liable,  and  that  on  this  declaration,  and,  as  the  fact  cer- 
tainly was,  that  the  crew  were  not  guilty  of  barratry,  it  was 
very  properly  agreed  that  the  plea  should  be  amended  by  in- 
serting the  words  "  but  not  barratrously  "  after  the  words 
"negligently  and  improperly."  And  the  plea,  therefore,  in  its 
present  shape  raises  the  question  whether  the  underwriters  are 
liable  for  the  willful  but  not  barratrous  act  of  the  master  and 
crew,  in  rendering  the  vessel  unseaworthy  before  the  end  of 
the  voyage,  b}'^  casting  overboard  a  part  of  the  ballast.  The 
case  was  very  fully  and  ably  argued,  during  the  course  of  the 

last  and  present  term,  before  my  brothers,  Alderson,  Gurney, 

37 


418  Insurance:    Fire,   Life,  Marine.  o.  ix. 

Maule,  and  myself.  We  have  considered  it,  and  are  of  opinion 
that  the  plea  is  bad  in  substance,  and  that  the  plaintiff  is  en- 
titled to  judgment,  notwithstanding  the  verdict. 

The  question  depends  altogether  upon  the  nature  of  the 
implied  warranty  as  to  seaworthiness  or  mode  of  navigation 
between  the  assured  and  the  underwriter  on  a  time  policy.  In 
the  case  of  an  insurance  for  a  certain,  voyage^  it  is  clearly  es- 
tablished that  there  is  an  implied  warranty  that  the  vessel  shall 
be  seaworthy,  by  which  is  meant  that  she  shall  be  in  a  fit  state 
as  to  repairs,  equipment,  and  crew,  and  in  all  other  respects,  to 
encounter  the  ordinary  perils  of  the  voyage  insured  at  the  time 
of  sailing  upon  it.  If  the  assurance  attaches  before  the  voyage 
commences,  it  is  enough  that  the  state  of  the  ship  be  com- 
mensurate to  the  then  risk.  And,  if  the  voyage  be  such  as  to 
require  a  different  complement  of  men,  or  state  of  equipment, 
in  different  parts  of  it  (as,  if  it  were  a  voyage  down  a  canal  or 
river  and  thence  across  to  the  open  sea),  it  would  be  enough  if 
the  vessel  were,  at  the  commencement  of  each  stage  of  the  nav- 
igation, properl}^  manned  and  equipped  for  it.  But  the  assured 
makes  no  warranty  to  the  underwriters  that  the  vessel  shall 
continue  seaworthy,  or  that  the  master  or  crew  shall  do  their 
duty  during  the  voyage ;  and  their  negligence  or  misconduct  is 
no  defence  to  an  action  on  the  policy,  where  the  loss  has  been 
immediately  occasioned  by  the  perils  insured  against.  This 
principle  is  now  clearly  established  by  the  cases  of  BtisJc  v. 
Royal  Exchange  Company,  2  B.  &  Aid.  72  ;  Walkej^  v.  Mail- 
land,  5  B.  &  Aid.  171  ;  Tloldsworth  v.  Wise,  7  B.  &  C.  791 ; 
Bishop  v.  Portland,  id.  219 ;  and  Shore  v.  Bentall,  id.  798,  n. ; 
nor  can  any  distinction  be  made  between  the  omission  by  the 
master  and  crew  to  do  an  act  which  ought  to  be  done,  or  the 
doing  an  act  which  ought  not,  in  the  course  of  the  navigation. 
It  matters  not  whether  fire  which  causes  a  loss  be  lighted  im- 
properly, or,  after  being  properly  lighted,  be  negligently  at- 
tended ;  whether  the  loss  of  an  anchor,  which  renders  the  ship 
unseaworthy,  be  attributable  to  the  omission  to  take  proper 
care  of  it,  or  to  the  improper  act  of  shipping  it,  or  cutting  it 
away ;  nor  could  it  make  any  difference  whether  any  other 
part  of  the  equipment  were  lost  by  mere  neglect,  or  thrown 
away  or  destroyed  in  the  exercise  of  an  improper  discretion,  by 
those  on  board.     If  there  be  any  fault  in  the  crew,  whether  of 


o.  IX.  Dixon  v.  Sadler.  419 

omission  or  commission,  the  assured  is  not  to  be  responsible  for 
its  consequences. 

The  only  case  which  appears  to  be  at  variance  wich  this 
principle  is  that  of  Law  v.  Ilollingsworth,  7  T.  R.  160,  in  which 
the  fact  of  the  pilot,  who  had  been  taken  on  board  for  the 
navigation  of  the  River  Thames,  having  quitted  the  vessel  be- 
fore he  ought  (under  what  circumstances  is  not  distinctly 
stated)  appears  to  have  been  held  to  vitiate  the  insurance.  In 
this  respect,  we  cannot  help  thinking  that  the  case,  although 
attempts  were  made  to  distinguish  it  in  some  of  the  decided 
cases,  must  be  considered  as  having  been  overruled  by  the 
modern  authorities  above  referred  to ;  and  that  the  absence, 
from  any  cause  to  which  the  owner  was  not  privy,  of  the 
master  or  any  part  of  the  crew,  or  of  the  pilot  (who  may  be 
considered  as  a  temporary  master),  after  they  had  been  on 
boai'd,  must  be  on  the  same  footing  as  the  absence,  from  a 
similar  cause,  of  any  part  of  the  necessary  stores  or  equip- 
ments originally  put  on  board.  The  great  principle  established 
by  the  more  recent  decisions  is,  that,  if  the  vessel,  crew,  and 
equipments  he  07'iginaUy  sufficient,  the  assured  has  done  all 
that  he  contracted  to  do,  and  is  not  responsible  for  the  subse- 
quent deficiency  occasioned  hy  any  neglect  or  miscondtict  of  the 
master  or  crew  •  and  this  principle  prevents  many  more 
and  difficult  inquiries,  and  causes  a  more  complete  indem- 
nity to  the  assured,  which  is  the  object  of  the  contract  of 
insurance. 

If  the  case,  then,  were  that  of  a  policy  for  a  particular 
voyage,  there  would  be  no  question  as  to  the  insufficiency  of 
the  plea  ;  and  the  only  remaining  point  is,  whether  the  circum- 
stance of  this  being  a  time  policy  makes  a  difference.  There 
are  not  any  cases  in  which  the  obligation  of  the  assured  in 
such  a  case,  as  to  the  seaworthiness  or  navigation  of  a  vessel, 
is  settled  ;  but  it  may  be  safely  laid  down,  that  it  is  not  more 
extensive  than  in  the  case  of  an  ordinary  policy,  and  that,  if 
there  is  no  contract  as  to  the  conduct  of  the  crew  in  the  one 
case,  there  is  none  in  the  other.  Here  it  is  clear  that  no  objec- 
tion arises  on  the  ground  of  seaworthiness  of  the  vessel  until 
that  unseaworthiness  was  caused  by  throwing  overboard  a  part 
of  the  ballast,  by  the  improper  act  of  the  master  and  crew  ; 
and,  as  the  assured  is  not  I'esponsible  for  such  improper  act,  we 


420  Insurance  :   Firfc,  Life,  Marine.  o.  n. 

are  of  opinion  that  the  plea  is  bad  in  substance,  and  the  plain- 
tiff entitled  to  our  judgment. 

Rule  absolute  to  enter  judgment  for  the  plaintiff , 
non  obstante  veredicto. 

Supreme  Judicial  Court  of  Massachusetts,  1878. 
BURGESS  V.  EQUITABLE  MARINE   INS.   CO. 

(126  Mass.  70.) 
Warranty  against  deviation. 

Action  of  contract  on  a  policy  of  insurance. 

Risk  to  commence  June  13,  1874,  and  to  expire  with  the 
voyage.  The  vessel  insured,  named  Christie  Johnstone, 
sailed  from  Plymouth  on  June  13,  1874,  on  a  cod-fishing  voy. 
age  to  the  Banks,  in  a  seaworthy  condition,  with  four  barrels 
of  clam  bait,  which  was  the  usual  quantity  of  bait  taken  by 
vessels  of  her  class  on  such  a  voyage.  For  several  years  past 
it  had  been  the  practice  of  such  vessels  to  take  a  supply  of  bait 
insufficient  to  last  for  the  entire  trip,  and  to  rely  principally 
on  catching  squid  on  the  Banks,  to  use  for  bait ;  and  for  years 
prior  to  1874  squid  had  been  plenty  on  the  Banks,  but  in  1874 
they  were  very  scarce. 

After  fishing  on  the  Banks  for  three  weeks,  and  having 
exhausted  nearly  all  his  bait,  the  master  of  the  vessel,  solely 
for  the  purpose  of  procuring  bait,  went  to  St.  Peter's,  the 
nearest  practicable  port  where  bait  could  be  obtained,  there 
procured  bait,  and  then  sailed  from  St.  Peter's  to  the  Banks, 
and  resumed  fishing.  To  reach  the  port  of  St.  Peter's,  the 
vessel  sailed  about  one  hundred  and  ten  miles  from  the  fishing- 
ground.  She  left  the  fishing-ground  on  Thursday,  reached  St. 
Peter's  on  Saturday,  and.  having  procured  bait  there,  left 
St.  Peter's  on  Tuesday  following,  and  then  sailed  for  another 
bank,  where  she  arrived  and  resumed  her  fisning  on  the  next 
Thursday.  On  August  6,  1874,  while  so  fishing  on  the  Banks, 
the  vessel  encountered  a  severe  gale,  sprung  a  leak,  and  was 
totally  lost,  with  all  the  property  on  board. 

The  defendant  requested  a  ruling  from  the  trial  judge,  that 
these  facts  amounted  in  law  to  a  deviation  ;  which  was  de- 
clined, the  judge  ruling  as  follows :   "  If  the  vessel  left  FJym- 


0.  IX.  Burgess  v.  Equitable  Marine  Ins.  Co.  421 

outb  with  the  usual  amount  of  bait  for  the  kind  of  fishing 
in  which  she  was  to  engage,  and  by  an  unexpected  failure  of 
bait  of  the  kind  ordinarily  taking  on  the  fishing-ground,  it 
became  necessary  for  her  to  go  into  port  to  procure  bait,  and 
she  went  to  the  nearest  practicable  port  for  that  purpose,  such 
going  into  port  was  not,  as  matter  of  law,  a  deviation." 

Endicott,  J. — By  the  terms  of  the  policy  the  vessel  was  in- 
sured "  at  and  from  Plymouth  to  the  Banks,  cod-fishing,  and  at 
and  thence  back  to  Plymouth."  This  is  a  definite  and  distinct 
description  of  the  contemplated  voyage  between  two  fixed 
termini.  The  Banks  are  named  as  the  outw^ard  terminus,  and 
while  there  engag-ed  in  cod-fishing,  and  until  her  return  to 
Plymouth,  the  vessel  was  covered  by  the  policy.  The  language 
used  is  not  open  to  the  construction  that  it  was  the  intention 
of  the  parties  to  insure  her  while  prosecuting  the  adventure 
elsewhere,  or  doing  what  was  necessary  to  make  it  successful 
outside  and  beyond  the  prescribed  limits.  A  voyage  is  the 
sailing  of  a  vessel  from  one  port  or  place  to  another  port  or 
place,  and  the  purpose  for  which  it  is  to  be  conducted,  whether 
as  a  trading,  freighting,  or  fishing  voj^age,  is  often  mentioned 
in  policies  of  insurance.  But  this  designation  cannot  vary  or 
extend  the  description,  route,  or  termini  of  the  voyage  as 
named  in  the  policy,  unless  some  usage,  connected  with  the 
particular  trade  or  adventure,  is  shown  to  exist.  No  evidence 
was  offered  of  a  usage  in  such  voyages  to  leave  the  Banks  and 
go  into  port  for  bait.  So  far  as  the  evidence  reported  discloses 
any  usage  in  that  regard,  it  appears  that  for  some  years  it  had 
been  the  practice  to  carry  out  a  limited  amount  of  bait,  and 
to  rely  upon  obtaining  an  additional  supply  on  the  Banks. 
Such  being  the  practice  to  obtain  bait  on  the  Banks,  wlien  the 
supply  taken  out  was  exhausted,  a  departure  from  the  Banks 
for  that  purpose  could  not  have  been  contemplated  by  the 
parties  in  making  the  policy.  We  have,  therefore,  a  definite 
description  of  the  voyage  in  the  policy,  and  a  usage  that  does 
not  extend  its  provisions.  The  question  decided  in  Friend  v. 
Gloucester  Ins.  Co.,  113  Mass.  326,  arose  upon  a  clause  in  a 
policy  prohibiting  a  fishing  vessel  from  sailing  on  a  voyage 
east  of  Ca|^  Sable  after  a  certain  date,  and  throws  no  light 
upoa  the  construction  to  be  given  to  the  words  of  this  policy. 


422  Insurance;   Fire,  Life,  Marine.  o.  ix. 

The  decision  in  The  Tarquin,  2  Lowell,  358,  turned  upon  the 
construction  of  the  shipping  articles  of  seamen,  and  not  of  a 
policy  of  insurance. 

We  are,  therefore,  of  opinion,  that  the  vessel,  by  leaving 
the  Banks  and  going  to  St.  Peter's  for  bait,  departed  from  the 
voyage  described  in  the  policy  ;  and  the  only  question  to  be 
determined  is,  whether  in  law  there  has  been  a  deviation  which 
avoids  the  policy. 

It  may  be  stated,  in  general  terms,  that  the  assured  is  pro- 
tected by  his  policy  while  the  vessel  pursues  the  usual  and 
customary  course  of  the  voyage ;  but  any  departure  from  the 
course,  or  delay  in  prosecuting  it,  without  necessity  or  just 
cause,  is  a  deviation,  and  discharges  the  insurer,  because  an- 
other voyage  has  been  voluntarily  substituted  for  that  which 
was  insured.  Whether  the  degree  or  period  of  the  risk  is  in- 
creased, is  unimportant,  as  the  assured  has  no  right  to  substi- 
tute a  different  risk.  Whenever,  therefore,  there  is  a  manifest 
departure  from  the  course  of  the  voyage,  the  assured  must  show 
that  it  was  justified  by  the  necessity  of  the  case.  Stocker  v. 
Harris,  3  Mass.  409,  418  ;  Brazier  v.  Clap,  5  Mass.  1 ;  Coffin 
X.  JVewhuryport  Ins.  Co.,  9  Mass.  436,  449 ;  Kettell  v.  Wiggin, 
13  Mass.  68. 

In  the  case  at  bar,  the  alleged  necessity  arose  from  scarcity 
of  bait.  The  plaintiff  did  not  put  on  board,  when  the  vessel 
sailed  from  Plymouth,  enough  for  the  entire  trip.  Squid  had 
been  plenty  on  the  Banks  during  several  years  prior  to  1874,  and 
the  plaintiff  relied  upon  catching  them  and  using  them  for  that 
purpose.  They  happened  this  season  to  be  very  scarce,  and, 
after  fishing  three  weeks  and  nearly  exhausting  his  supply,  the 
master  sailed  for  St.  Peter's,  over  one  hundred  miles  distant, 
procured  bait,  and  returned  to  the  Banks  after  an  absence  of  a 
week.  It  is  to  be  observed  that  this  so-called  necessity  did  not 
arise  from  any  peril  insured  against  in  the  policy,  or  ordinarily 
insured  against  in  policies  of  insurance,  and  did  not  involve  the 
safety  of  the  vessel  or  of  any  property  on  board :  it  had  rela- 
tion solely  to  the  success  of  the  fishing  adventure,  and  in  this 
the  defendant  had  no  interest  and  had  assumed  no  responsi- 
bility. 

We  are  of  opinion  that  the  claim  of  the  plaintiff  cannot  be. 
sustained ;  and  that  a  necessity  to  justify  the  departure  in  thia 


0.  IX.  Burgess  v.  Equitable  Marine  Ins.  Co.  423 

case  cannot  be  found  in  the  fact  that,  without  going  to  St. 
Peter's  for  bait,  the  voyage  would  have  failed  to  be  successful 
or  profitable  to  the  plaintiff. 

The  strictness  with  which  the  courts  have  held  the  insured 
to  the  route  named  in  the  policy  is  illustrated  by  the  cases 
already  cited,  and  by  many  others  cited  at  the  argument. 
Dodge  V.  Essex  Ins.  Co.,  12  Gray,  65 ;  Middlewood  v.  Blakes, 
7  T.  K.  162 ;  Brown  v.  Taylew\  4  A.  &  E.  241 ;  Fernmidez 
V.  Great  Western  Ins.  Co.,  48  N.  Y.  571  ;  Merchants'  Ins.  Co. 
V.  Algeo,  32  Penn.  St.  330.  But  the  question  to  be  determined 
here  is,  what  is  the  nature  and  extent  of  the  necessity  or  just 
cause  which  will  warrant  a  departure  from  the  route. 

In  this  connection  it  may  be  well  to  refer  to  the  necessities 
which  clearly  justify  a  departure.  There  is  no  deviation  where 
the  master  is  compelled  by  force  either  to  depart  from  his 
route  or  delay  its  prosecution  by  the  acts  of  his  crew  ;  Elton  v. 
Brogden,  2  Str.  1264 ;  Driscol  v.  Passmore,  1  B.  &  P.  200  ; 
Driscol  V.  Bovil,  1  B.  &  P.  313  :  or  where  he  is  detained  by 
those  in  authority,  or  taken  out  of  his  course  by  a  ship  of  war ; 
Scott  V.  Thompson^  1  N.  P.  181.  In  Phelj^s  v.  Auldjo,  2  Camp. 
360,  a  master  was  ordered  to  sail  out  and  examine  a  vessel  in 
the  offing  Vjy  a  captain  of  a  king's  ship,  and,  it  appearing  that 
he  complied  without  remonstrance  or  threat  of  force,  it  was 
held  to  be  a  deviation.  In  cases  of  this  description  there  must 
be  a  vis  major ,  compelling  a  departure  or  delay,  which  excuses 
the  master.  So,  where  the  master  is  obliged  to  leave  his  courso. 
or  delay  by  stress  of  weather  or  other  peril  of  the  sea,  or  to  g'  > 
into  port  to  repair  or  refit,  or  to  re-man  or  recruit  his  crew  dis- 
abled by  sickness  or  reduced  by  casualties,  or  to  avoid  captui<\ 
or  to  join  convo}'  in  time  of  war,  there  is  no  deviation.  It  is 
unnecessary  to  cite  all  the  cases  which  fall  within  these  exco})- 
tions;  many  of  those  relied  on  by  the  plaintiff  are  clearly  with- 
in them.  Dnnlo'p  v.  Allan,  Millar  on  Ins.,  414 ;  Green  \. 
Elmslie,  Peake,  212 ;  Clark  v.  United  Ins.  Co.,  7  Mass.  365. 
The  case  last  cited  is  put  upon  the  express  ground  that  the  ship 
was  prevented  by  causes  insured  against  from  proceeding  on 
her  route,  and  the  departure  was  from  necessity.  See  also 
Folsom  V.  Merchants'  Ins.  Co.,  38  Maine,  414. 

Nor  is  the  departure  from  the  route  for  the  purpose  of  sa  v 
ing  human  life  a  deviation ;  nor  is  a  policy  avoided  when  the 


424  Insurance:    Fire,  Like,  Marine.  c.  ix. 

ship  goes  out  of  her  course  to  obtain  necessary  medical  assist- 
ance for  those  lawfully  on  board.  Bond  v.  Brig  Cora,  2 
Wash.  C  C.  80 ;  Perkins  v.  Augusta  Ins.  Co.,  10  Gray,  312. 
In  this  class  of  cases  the  justification  does  not  rest  on  the  same 
ground  as  in  those  previously  noticed.  It  is  allowed  from 
motives  of  humanity,  and  cannot  be  extended  to  the  saving  or 
protection  of  property.  In  all  cases  the  necessity  must  be  a 
real  and  imperative  necessity  affecting  the  vessel — such  as 
actual  force  preventing  the  master  from  exercising  his  will, 
peril  of  the  sea,  danger  of  capture,  want  of  repair,  disability  of 
the  crew,  or  unseaworthiness — occurring  under  such  circum- 
stances that  the  master,  acting  upon  his  best  judgment  for  the 
interest  of  all  parties,  has  no  alternative,  and  is  forced  to  leave 
his  route  or  delay  its  prosecution. 

When  the  departure  is  caused  by  such  a  necessity  the 
change  of  route  in  no  respect  alters  the  insurance,  because  the 
course  of  a  sea-voyage  must  at  times  be  necessarily  subject  to 
extraordinary  perils  of  the  sea,  and  contingencies  beyond  the 
control  of  the  master,  and  in  the  presence  of  which  he  is  forced 
to  succumb  ;  and  when  they  occur,  and  he  is  obliged  to  depart 
from  the  usual  course  of  the  voyage,  there  is  no  deviation  in 
the  legal  sense  of  the  term,  for  the  departure  is  the  necessary 
incident  of  the  route  named  in  the  policy  as  prosecuted  at  the 
time  by  the  ship.  The  probability  of  such  occurrences  is  well 
understood  ;  they  are  known  perils  of  the  voyage,  and  enter 
into  the  ordinary  contract  of  marine  insurance.  And  when  the 
master,  compelled  by  the  necessity,  does  that  which  is  for  the 
benefit  of  all  concerned,  the  act  is  within  the  intention  of 
the  policy  as  much  as  if  expressed  in  terms.  It  would  be 
practically  impossible  to  state  in  the  policy  all  the  perils  which 
might  arise  in  a  sea-voyage  and  excuse  departure  from  the 
route  ;  and,  therefore,  by  the  rules  of  interpretation  applicable 
to  this  species  of  contract,  the  policy  is  held  by  implication  to 
include  them.  See  Green  v.  Pacific  Ins.  Co.,  9  Allen,  21T, 
219.  In  such  a  policy  as  this  the  necessities  justifying  a  de- 
parture, in  the  absence  of  usage,  from  the  route,  and  a  visit  to 
a  port  not  named,  are  those  which  are  caused  by  some  peril 
occurring  in  the  prosecution  of  the  voyage  within  the  limits 
named  in  the  policy,  and  not  those  which  arise  in  the  prosecu- 
tion of  the  business  for  which  the  voyage  was  undertaken. 


0.  IX.  Burgess  v.  Equitable  Marine  Ins.  Co.  425 

It  is  true,  there  is  a  class  of  oases,  much  relied  on  by  the 
plaintiff,  where  the  test  is  whether  the  ship  at  the  time  of  the 
alleged  deviation  was  pursuing  the  object  and  business  of 
the  voyage.  But  those  are  cases  of  delay,  where  the  ship  was 
at  the  port  or  place  named  or  permitted  in  the  policy.  The  per- 
mission in  a  policy  to  go  to  certain  ports  or  places  must  always 
be  construed  in  reference  to  the  purpose  of  the  voyage.  Wil- 
liams V.  Shee,  3  Camp.  469 ;  1  Arnould  on  Ins.,  §§  141,  142. 
Any  delay  for  the  prosecution  of  other  business,  or  any  unrea- 
sonable delay  in  prosecuting  the  business  of  the  voyage,  at  such 
port,  is  a  deviation.  African  Mej'chants  v.  British  Ins.  Go.., 
L.  R.,  8  Ex.  154.  But  if  the  delay  was  necessary  in  order  to 
accomplish  the  objects  of  the  voyage,  and  was  reasonable 
under  the  circumstances  of  the  case,  then  there  is  no  deviation. 
Columhian  Ins.  Co.  v.  Catlett,  12  Wheat.  383  ;  Phillips  v.  Irv- 
ing, Y  Man.  &  Gv.  325.  In  other  words,  if  the  ship  is  at  a 
place  permitted,  the  delay  shall  not  be  a  deviation,  if  it  is 
necessary  in  the  proper  prosecution  of  the  business  of  the  voy- 
age. But  this  test  cannot  be  applied  to  a  departure  f rom  Ihe 
route  to  a  port  not  named  or  permitted,  for  the  purpose  of  the 
adventure.  In  all  trading  vo\^ages,  for  example,  the  ship  is 
confined  to  the  ports  or  coasts  named  in  the  polic}'^,  and  she 
cannot  depart  to  other  places  simply  because  she  may  better 
prosecute  the  trade  elsewhere.  If  the  departure  from  the 
route  to  insure  the  success  of  the  adventure  can  be  justified  as 
a  necessity,  it  would  be  difficult  to  state  any  limit  to  the  privi- 
lege, or  to  the  duration  of  the  insurance,  and,  in -the  absence  of 
permission  to  do  so  in  the  policy,  it  cannot  be  implied.  See 
Kettell  V.  Wiggin.,  13  Mass.  ^'^  ;  Robertson  v.  Columhian  Ins. 
Co..,  8  Johns.  491.  The  plaintiff's  vessel  might  have  delayed 
for  any  reasonable  time  upon  the  Banks  for  the  purpose  of 
fishing  or  getting  bait,  without  being  guilty  of  deviation ;  and 
would  have  been  protected  by  the  policy,  even  without  proof 
of  usage,  because  fishing  was  the  purpose  of  the  voyage,  and 
she  could  properly  prosecute  it  within  the  route  named  in  the 
policy.  jSfoljle  v.  Kennoway,  2  Doug.  510,  513.  But  she  could 
not  go  beyond  or  away  from  the  route  for  that  purpose. 

The  illustration  put  by  the  defendant's  counsel  is  apposite: 
"If  a  vessel  insured  to  Havana  and  back  should  learn,  before 
entering  the  port,  that  there  was  no  cargo  there  with  whict 


426  Insurance  :    Fire,  Life,  Marine.  o.  ix. 

she  could  be  loaded,  no  one  would  say  that  her  policy  pro- 
tected her  in  going  to  the  nearest  port  where  a  cargo  could  be 
had."  Other  illustrations  may  be  given.  If  a  vessel  insured 
to  a  particular  port,  having  letters  of  credit,  should  find  on 
arrival  that  the  parties  on  whom  they  were  drawn  had  failed, 
she  could  not  go  to  another  port  for  funds,  and  return  for  her 
cargo,  and  be  protected  by  her  policy.  If  fish  had  been  scarce 
on  the  Banks  in  18Y4,  it  would  hardly  be  contended  that 
the  vessel  could  have  gone  to  other  fishing-grounds  to  fish, 
although  not  more  distant  than  St.  Peter's ;  and  yet,  if  she  was 
justified  by  necessity  in  leaving  to  obtain  bait  at  St.  Peter's 
and  to  return  in  order  to  make  the  trip  successful,  it  would  be 
difficult  to  hold  that  the  same  necessity  would  not  allow  her  to 
fish  elsewhere. 

In  the  argument  of  the  plaintifi"s  counsel,  no  case  was  cited 
which  sustains  the  position  he  has  assumed,  and  we  are  not 
aware  of  an}^  case  which  goes  to  this  extent.  In  Greene  v. 
Pacific  Ins.  Co.,  9  Allen,  217,  the  voyage  was  broken  up  by 
reason  of  perils  to  the  ship  insured  against  in  the  policy,  and 
the  question  was  as  to  the  right  to  abandon.  In  Stacker  v. 
Harris,  3  Mass.  409,  which  is  strongly  relied  on  by  the  plain- 
tiff, an  American  ship  sailing  under  Spanish  colors,  as  allowed 
by  the  policy,  delayed  at  Yera  Cruz  five  months  for  the  pur- 
pose of  recovering  outward  cargo  which  had  been  seized  after 
landing  by  the  authorities.  The  captain  failed  to  obtain  a 
restitution,  and  being  unable  to  obtain  a  clearance  from  Vera 
Cruz  to  the  United  States  under  Spanish  colors  without  giving 
bond  to  land  his  cargo  in  some  part  of  the  dominion  of  Spain, 
and  there  being  a  partner  of  a  Spanish  house  in  Havana  by 
whose  assistance  he  could  restore  the  character  of  his  ship  as  an 
American  bottom,  he  took  a  cargo  and  freight  and  sailed  for 
Havana.  It  is  stated  in  the  opinion,  though  not  necessary  to 
the  decision,  that  the  delay  at  Vera  Cruz  was  not  a  deviation. 
And  it  was  said  by  the  court :  "  It  may  be  understood  that 
the  insurers  by  this  policy  "  (w^hich  was  on  ship,  cargo,  and 
freight)  "  were  not  interested  in  the  outward  cargo,  after  it 
had  been  safely  landed  from  the  ship.  But  the  captain  is  the 
common  agent  of  the  concerned,  and  it  is  his  duty  to  manage 
their  distinct  and  separate,  as  well  as  their  joint  interests,  ac- 
cording to  his  best  judgment ;  and  whatever  is  fairly  done  with 


0.  IX.  Burgess  v.  Equitable  Marine  Ins.  Co.  427 

this  purpose  is  witliin  the  course  of  the  voyage."  This  is 
simply  stating,  in  another  form  of  words,  that  the  object  for 
which  the  ship  was  at  Vera  Cruz  was  the  disposal  of  her  cargo, 
and  if  the  delay  was  occasioned  by  fairly  attempting  to  do  so, 
there  was  no  deviation.  But  the  case  was  decided  for  the  de- 
fendant, on  the  ground  that,  in  sailing  for  Havana,  instead  of 
to  a  port  in  the  United  States  as  required  by  the  policy,  the 
ship  deviated,  and  that  the  reason  for  doing  so  was  not  such  a 
necessity  as  justified  the  departure.  It  was  suggested,  in  giv- 
ing the  reasons  for  this  decision,  that  if  the  partner  had  died 
or  had  left  Havana  before  the  ship  arrived,  then,  by  force  of 
the  same  necessity,  a  voyage  to  some  other  Spanish  port  or 
ports  would  have  been  equally  excused  ;  and  thus  the  ship 
might  have  made  several  passages,  although  by  the  terms  of 
the  policy  she  was  only  insured  from  Yera  Cruz  to  the  United 
States ;  and  that  this  would  have  been  to  engage  the  insurer 
in  an  unlimited  voyage  and  risk.  The  same  suggrestion  Avould 
be  apphcable  in  this  case.  If  the  master  had  failed  to  find  bait 
at  St.  Peter's,  the  same  necessity  would  have  justified  him  in 
visiting  port  after  port  until  he  found  it. 

As  in  the  opinion  of  the  court  the  trip  to  St.  Peter's  was  a 
deviation  which  discharged  the  insurer,  by  the  terms  of  the 
report  there  must  be 

Judgment  for  the  defendant. 


OHAPTER  X. 


GENERAL    AVERAGE. 


\ 


United  States  Supricmk  Court,   1869. 
STAR   OF    HOPE. 

(9  Wall.  203.) 
General  average  :  sacrifices,  expenses,  stranding. 

Libels  by  the  shippers  of  cargo  against  the  ship  for  non 
performance  of  contract  of  affreightment  by  reason  of  failure 
to  deliver  cargo,  which  had  been  sold  by  the  master  in  tlx; 
course  of  the  voyage  to  pay  for  repairs  at  Montevideo,  mado 
necessary  by  the  stranding  of  the  ship.  Answer  by  ship-owners, 
that  the  stranding  took  place  under  circumstances  which  made 
the  damage,  and  all  expenses  consequent  thereon,  a  subject  of 
general  average  contribution. 

The  district  and  circuit  courts  decreed  in  favor  of  the  libel- 
lants,  and  decided  that  the  loss  and  expense  consequent  upon 
the  stranding  were  a  subject  of  particular  average  and  must 
be  borne  by  the  ship. 

Clifford,  J. — With  a  full  cargo  on  board,  the  ship  sailed 
for  her  port  of  destination  on  the  day  alleged  in  the  pleadings ; 
and  during  the  voyage,  to  wit,  on  the  14th  of  April  following, 
it  was  discovered  that  great  quantities  of  smoke  and  vapor 
were  issuing  from  the  fore  and  after  hatches  of  the  ship.  She 
was  proceeding  on  her  voyage  at  the  time  the  discovery  w;i ; 
made,  in  latitude  forty-six  degrees  south,  longitude  fifty-thico 
degrees  west,  but  the  w^eather  w^as  squally,  and  the  sea  wrs 
rough.  Precautions,  such  as  are  usual  on  such  occasions,  were 
immediately  adopted  :  the  hatches  were  fastened  down,  and 
"  everything  made  tight,"  in  order  to  check  as  much  as  possible 


0.  X.  Stae  of  Hope.  429 

the  progress  of  the  fire,  at  least  until  a  port  of  succor  could  be 
reached. 

Great  alarm  was  felt,  and  the  fears  of  all  were  much  in- 
creased by  the  fact,  well  known  to  all,  that  the  cargo  contained 
prepared  gunpowder  and  large  quantities  of  spirituous  liquors. 
Under  the  circumstances  the  crew  refused  to  continue  the  voy- 
age, and  the  master  determined,  very  pi'operly,  as  the  parties 
agree,  to  make  for  the  Bay  of  San  Antonio,  on  the  south- 
east coast  of  Patagonia,  as  the  nearest  anchorage,  and  at  the 
3nd  of  four  days  the  ship  arrived  off  that  bay  and  set  the 
usual  signal  for  a  pilot. 

Throughout  that  period  the  signs  of  fire  continued  to  in- 
crease ;  and  in  getting  up  the  chains,  so  as  to  be  ready  to  cast 
anchor  without  delay,  they  were  found  to  be  quite  hot,  and 
there  were  other  indications  of  fire,  which  greatly  heightened 
the  general  alarm.  Unwilling  to  run  into  a  bay  unknown  to 
him,  without  a  pilot,  the  master  set  his  signal  as  aforesaid  and 
waited  three  hours  for  one ;  but  no  one  came,  and  it  became 
evident  that  none  could  be  expected,  as  the  coast  was  wild  and 
desolate. 

Something  must  be  done,  as  the  alarm  increased  as  the 
impending  peril  became  more  imminent.  Haul  off  the  master 
could  not,  as  the  wind  and  waves  were  against  any  such  move- 
ment. He  could  not  resume  the  voyage  for  the  same  reason, 
and  also  because  the  crew  utterly  refused  their  co-operation  ; 
nor  could  he  with  safety  any  longer  attempt  to  "  lie  to,"  as  the 
ship  was  gradual!}^  approaching  the  shore,  and  because  she  was 
exposed  both  to  the  impending  peril  of  fire  on  board,  and  to 
the  danger,  scarcely  less  imminent,  of  shipwreck  from  the  wind 
and  waves.  Nothing,  therefore,  remained  for  the  master  to  do, 
which  it  was  within  liis  power  to  accomplish,  but  to  run  the 
vessel  ashore — which  it  is  agreed  b}'  the  parties  would  have  re- 
sulted in  the  "  certain,  and  almost  instant  loss  of  vessel,  cargo, 
and  all  on  board  " — or  to  make  the  attempt  to  run  into  the  bay 
without  the  assistance  of  a  pilot.  Evidently  he  would  have 
been  faithless  to  every  interest  committed  to  his  charge  if  he 
had  attempted  to  beach  the  vessel  at  that  time  and  place,  as 
the  agreed  statement  shows  that  the  Aveather  was  rough,  that 
the  wind  was  high  and  blowing  toward  the  land  with  a  heavy 
sea,  and  that  the  shore  was  rocky  and  precipitous. 


430  Insdbance  :    Fikk,  Life,  Marine,  o.  t. 

What  the  master  did  on  tlie  occasion  is  well  described  by 
the  parties  in  the  agreed  statement,  in  which  they  say  he  at 
lengtli  determined,  as  the  best  thing  to  be  done  for  the  general 
safety,  and  especially  for  the  preservation  of  the  cargo  and  the 
lives  of  those  on  board,  to  make  the  attempt  to  run  in  without 
a  pilot,  preferring  all  risks  to  be  thereby  incurred  rather  than 
to  remain  outside  in  the  momentary  apprehension  of  destruction 
to  all ;  and  the  parties  agree  that  he  was  fully  justified  in  his 
decision  as  tested  by  all  the  circumstances,  although  the  ship 
in  attempting  to  enter  the  bay  grounded  on  a  reef,  and  before 
she  could  be  got  to  sea  again  sprung  a  leak  and  sustained  very 
serious  injuries  in  her  bottom. 

Great  success,  however,  attended  the  movement,  notwith- 
standing those  injuries,  as  the  water  taken  in  by  the  ship  ex- 
tinguished the  fire,  and  the  ship  remained  fast  and  secure  from 
shipwreck  until  the  winds  subsided  and  the  sea  became  calm. 

Repairs  could  not  be  made  at  that  place,  and  the  parties 
agree  that  the  injuries  to  the  ship  were  such  as  fully  justified 
the  master  in  returning  to  Montevideo  for  that  purpose,  as  that 
was  the  nearest  port  where  the  repairs  could  be  made.  He 
arrived  there  on  the  twenty-seventh  of  the  same  month,  and  it 
appears  by  the  agreed  statement  that  th-?  just  and  necessary 
expenses  incurred  by  the  ship  at  that  port  to  enable  her  to  re- 
sume the  voyage  were  one  hundred  thousand  dollars,  including 
repairs,  unloading,  warehousing,  and  reloading  of  the  cargo,  and 
that  the  master,  being  without  funds  or  credit,  was  obliged  to 
sell  a  considerable  portion  of  the  cargo  to  defray  those  expenses. 

Repaired  and  rendered  seaworthy  by  those  means,  the  ship 
on  the  11th  of  September  in  the  same  year  resumed  her 
voyage,  and  arrived  at  her  port  of  destination  on  the  7th  of 
December  following ;  and  the  master,  without  unnecessary 
delay,  delivered  the  residue  of  the  shipments  in  good  order 
to  the  respective  consignees,  as  required  by  the  contract  of 
affreightment. 

General  average  contribution  is  defined  to  be  a  contribu- 
tion by  all  the  parties  in  a  sea  adventure,  to  make  good  the  loss 
sustained  by  one  of  their  number  on  account  of  sacrifices  vol- 
untarily made  of  part  of  the  ship  or  cargo  to  save  the  residue 
and  the  lives  of  those  on  board  from  an  impending  peril,  or  for 
extraordinary  expenses  necessarily  incurred  by  one  or  mere  of 


o.  X.  Star  of  Hope.  431 

the  parties  for  the  general  benefit  of  all  the  interests  embarked 
in  the  enterprise.  Losses  which  give  a  claim  to  general  aver- 
age are  usually  divided  into  two  great  classes:  (1)  Those 
which  arise  from  sacrifices  of  part  of  the  ship  or  part  of  the 
cargo,  purposely  made  in  order  to  save  the  whole  adventure 
from  perishing ;  (2)  those  which  arise  out  of  extraordinary 
expenses  incurred  for  the  joint  benefit  of  ship  and  cargo. 

Common  justice  dictates  that  where  two  or  more  parties  are 
engaged  in  the  same  sea  risk,  and  one  of  them,  in  a  moment  of 
imminent  peril,  makes  a  sacrifice  to  avoid  the  impending  danger, 
or  incurs  extraordinary  expenses  to  promote  the  general  safety, 
the  loss  or  expenses  so  incurred  shall  be  assessed  upon  all  in 
proportion  to  the  share  of  each  in  the  adventure. 

Where  expenses  are  incurred  or  sacrifices  made  on  account 
of  the  ship,  freight,  and  cargo,  by  the  owner  of  either,  the 
owners  of  the  other  interests  are  bound  to  make  contribution 
in  the  proportion  of  the  value  of  their  several  interests ;  but  in 
order  to  constitute  a  basis  for  such  a  claim  it  must  appear  that 
the  expenses  or  sacrifices  were  occasioned  by  an  apparently 
imminent  peril,  that  they  were  of  an  extraordinar}-^  char- 
acter, that  they  were  voluntarily  made  with  a  view  to  the 
general  safety,  and  that  they  accomplished  or  aided  at  least  in 
the  accomplishment  of  that  purpose. 

Authorities  may  be  found  which  attempt  to  qualify  this 
rule,  and  assert,  that,  where  the  situation  of  the  ship  was  such 
that  the  whole  adventure  would  certainly  and  unavoidably 
have  been  lost  if  the  sacrifice  in  question  had  not  been  made, 
the  party  making  it  cannot  claim  to  be  compensated  by  the 
other  interests,  because  it  is  said  that  a  thing  cannot  be  regarded 
as  having  been  sacrificed  which  had  already  ceased  to  have  any 
value ;  but  the  correctness  of  the  position  cannot  be  admitted 
unless  it  appears  that  the  thing  itself  for  which  contribution  is 
claimed  was  so  situated  that  it  could  not  possibly  have  been 
saved,  and  that  its  sacrifice  did  not  contribute  to  the  safety  of 
the  crew,  ship,  or  cargo.  Sacrifices  where  there  is  no  peril 
present  no  claim  for  contribution ;  but  the  greater  and  more 
imminent  the  peril,  the  more  meritorious  the  claim  for  such  con- 
tribution, if  the  sacrifice  was  voluntary  and  contributed  to  save 
the  associated  interests  from  the  impending  danger  to  which 
the  same  were  exposed. 


432  Insurance  :    Fire,  Life,  Marine.  o.  x. 

Such  claims  have  their  foundation  in  equity,  and  rest  upon 
the  doctrine  that  whatever  is  sacrificed  for  the  common  benefit 
of  the  associated  interests  shall  be  made  good  by  all  the  inter- 
ests which  were  exposed  to  the  common  peril,  and  which  were 
saved  from  the  common  danger  by  the  sacrifice.  Much  is 
deferred  in  such  an  emergency  to  the  judgment  and  decision  of 
the  master ;  but  the  authorities  everywhere  agree  that  three 
things  must  concur  in  order  to  constitute  a  valid  claim  for 
general  average  contribution  :  First,  there  must  be  a  common 
danger  to  which  the  ship,  cargo,  and  crew  were  all  exposed  ; 
and  that  danger  must  be  imminent  and  apparently  inevitable, 
except  by  incurring  a  loss  of  a  portion  of  the  associated  inter- 
ests to  save  the  remainder.  Secondly,  there  must  be  the  vol- 
untary sacrifice  of  a  part  for  the  benefit  of  the  whole ;  as,  for 
example,  a  voluntary  jettison  or  casting  away  of  some  portion 
of  the  associated  interests  for  the  purpose  of  avoiding  the  com- 
mon peril,  or  a  voluntary  transfer  of  the  common  peril  from 
the  whole  to  a  particular  portion  of  those  interests.  Thirdly, 
the  attempt  so  made  to  avoid  the  common  peril  to  which  all 
those  interests  were  exposed  must  be  to  some  practical  extent 
successful ;  for,  if  nothing  is  saved,  there  cannot  be  any  such 
contribution  in  any  case.^ 

Equity  requires,  says  Emerigon,  that  in  these  cases  those 
whose  effects  have  been  preserved  b}"  the  loss  of  the  merchan- 
dise of  others  shall  contribute  to  this  damage,  and  commercial 
policy  as  well  as  equity  favors  the  principle  of  contribution,  as 
it  encourages  the  owner,  if  present,  to  consent  that  his  property, 
or  some  portion  of  it,  may  be  cast  away  or  exposed  to  peculiar 
and  special  danger  to  save  the  associated  interests  and  the  lives 
of  those  on  board  from  impending  destruction  ;  and,  if  not  pres- 
ent, the  moral  tendency  of  the  well-known  commercial  usage  is 
to  induce  the  master  to  exercise  an  independent  judgment  in 
the  emergency,  for  the  benefit  of  all  concerned. 

Masters  are  often  compelled,  in  the  performance  of  their 
duties,  to  choose  between  the  probable  consequences  of  immi- 

'  While  this  is  true,  some  authorities  maintain  that  the  success  need  not  be 
shown  to  have  been  caused  by  the  sacrifice  in  order  to  establish  a  right  to  gen- 
eral average  contribution,  but  that  it  is  enough  if  the  circumstances  existing 
at  the  time  of  such  sacrifice  justified  a  general  average  act.  Arnould,  Mar. 
Ins.,  p,  854  (6th  ed.,  1887).     See  g  119,  supra. 


o.  X.  '  Star  of  Hope.  433 

nent  perils  threatening  the  loss  of  the  ship,  cargo,  and  all  on 
board,  and  a  sacrifice  of  some  portion  of  the  associated  inter- 
ests in  their  custody  and  under  their  control,  as  the  only  means 
of  averting  the  (hingers  of  the  impending  peril  in  their  power 
lo  employ.  They  must  elect  in  such  an  emergency,  and  if 
they,  in  the  exercise  of  their  best  skill  and  judgment,  decide 
that  it  is  their  duty  to  lighten  the  ship,  cut  away  the  masts,  or 
to  strand  the  vessel,  courts  of  justice  are  not  inclined  to  over- 
rule their  determinations. 

Owners  of  vessels  are  under  obligation  to  employ  masters 
of  reasonable  skill  and  judgment  in  the  performance  of  their 
duties ;  but  they  do  not  contract  that  they  shall  possess  such 
qualities  in  an  extraordinary  degree,  nor  that  they  shall  do  in 
any  given  emergency  what,  after  the  event,  others  may  think 
would  have  been  best.  From  the  necessity  of  the  case,  the  law 
imposes  upon  the  master  the  duty,  and  clothes  him  with  the 
power,  to  judge  and  determine,  at  the  time,  whether  the  cir- 
cumstances of  danger  in  such  a  case  are  or  are  not  so  great  and 
pressing  as  to  render  a  sacrifice  of  a  portion  of  the  associated 
interests  indispensable  for  the  common  safety  of  the  remainder. 
Standing  upon  the  deck  of  the  vessel,  with  a  full  knowledge  of 
her  strength  and  condition,  and  of  the  state  of  the  elements 
which  threaten  a  common  destruction,  he  can  best  decide  in 
the  emergency  what  the  necessities  of  the  moment  require  to 
save  the  lives  of  those  on  board  and  the  property  intrusted  to 
his  care  ;  and  if  he  is  a  competent  master,  if  an  emergency 
actually  existed  calling  for  a  decision  whether  such  sacrifice 
was  required,  and  if  he  appears  to  have  arrived  at  his  conclu- 
sion with  due  deliberation,  by  a  fair  exercise  of  his  own  skill 
and  judgment,  with  no  unreasonable  timidity,  and  with  an 
honest  intent  to  do  his  duty,  it  must  be  presumed,  in  the  ab- 
sence of  proof  to  the  contrary,  that  his  decision  was  wisely  and  , 
properly  made.  1 

Controversies  respecting  the  allowance  or  adjustment  of 
general  average  more  frequently  arise  in  cases  where  the  sacri- 
fice made  consisted  of  a  jettison  of  a  portion  of  the  cargo  than 
in  respect  to  any  other  disaster  in  navigation. 

Explanations  and  illustrations  upon  the  subject,  therefore, 
whether  found  in  treatises  or  in  judicial  decisions,  are  usually 
more  particularly  applicable  to  cases  of  that  description  than 
2& 


434:  Insurance  :   Fire,  Life,  Marine.    "  o.  x 

to  a  case  where  the  vessel  was  stranded  ;  but  the  leading  princi 
pies  of  law  by  which  the  rights  of  parties  are  to  be  ascertained 
and  determined  in  such  cases  are  the  same  whether  the  sacri- 
fice made  consisted  of  a  part  of  the  cargo  or  of  a  part  or  the 
whole  of  the  ship,  as  the  controlling  rule  is,  that  what  is  given 
for  the  general  benefit  of  all  shall  be  made  good  by  the  contri- 
bution of  all,  which  is  the  germ  and  substance  of  all  the  law 
upon  the  subject.  Doubts  at  one  time  were  entertained  whether 
a  loss  occasioned  by  a  voluntary  stranding  of  the  vessel,  even 
though  it  was  made  for  the  general  safety,  and  to  avoid  the 
probable  consequences  of  an  imminent  peril  to  the  whole  adven- 
ture, was  the  proper  subject  of  general  average  contribution  ; 
but  those  doubts  have  long  since  been  dissipated  in  most  juris 
dictions,  and  they  have  no  place  whatever  in  the  jurisprudence 
of  the  United  States. 

"Where  the  ship  is  voluntarily  run  ashore  to  avoid  capture, 
foundering,  or  shipwreck,  and  she  is  afterwards  recovered  so  as 
to  be  able  to  perform  her  voyage,  the  loss  resulting  from  the 
stranding,  says  Mr.  Arnould,  is  to  be  made  good  by  general 
average  contribution  ;  and  the  writer  adds  that  there  is  no  rule 
more  clearly  established  than  this  by  the  uniform  course  of 
maritime  law  and  usage. 

Sustained  as  that  proposition  is  at  the  present  day  by  uni- 
versal consent,*  it  does  not  seem  to  be  necessary  to  refer  to 
other  authorities  in  its  support,  nor  is  it  necessary  to  enlarge 
that  rule  in  order  to  dispose  of  the  present  controversy ;  but  to 
prevent  any  misconception  as  to  the  views  of  the  court  it  is 
deemed  proper  to  add  that  it  is  settled  law  in  this  court  that 
the  case  is  one  for  general  average,  although  the  ship  was 
totally  lost,  if  the  stranding  was  voluntary  and  was  designed 
for  the  common  safety,  and  it  appears  that  the  act  of  stranding 
resulted  in  saving  the  cargo. 

Undoubtedly  the  sacrifice  must  be  voluntary  and  must  have 
been  intended  as  a  means  of  saving  the  remaining  proj)erty  of 
the  adventure,  and  the  lives  of  those  on  board,  and  unless  such 

'  This  statement  of  the  learned  court  is  not  quite  accurate.  See  the  able 
defense  of  a  contrary  view  in  the  Enc.  Brit.,  subject  General  Average  ;  and 
also  York  Antwerp  Rules.  §  125,  supra ;  Maclachan  on  Shipping,  p.  623  ; 
Gourlie,  Gen.  Av.,  pp.  183, 135.  The  custom  of  Lloyd's  excludes  damage  from 
Toluntary  stranding.     Owen,  Mar.  Ins.,  p.  271  (1890). 


c.  X.  Stak  of  Hope.  435 

was  the  purpose  of  the  act  it  gives  no  claim  for  contribution ; 
but  it  is  not  necessary  that  there  should  have  been  any  inten- 
tion to  destroy  the  thing  or  things  cast  away,  as  no  such  in- 
tention is  ever  supposed  to  exist.  On  the  contrary,  it  is  suffi- 
cient, that  the  property  was  selected  to  suffer  the  common 
peril  in  the  place  of  the  whole  of  the  associated  interests,  that 
the  remainder  might  be  saved. 

Suggestion  is  made  that  the  act  of  stranding  of  the  ves- 
sel in  this  case  was  not  a  voluntary  act,  as  the  reef  where  she 
grounded  was  not  visible  at  the  time  and  was  unknown  to  the 
master;  but  the  agreed  statement  shows  that  in  undertaking  to 
run  into  the  bay  the  master  knew  that  the  chief  risk  he  had  to 
encounter  was  the  stranding  of  the  ship,  and  the  precautions 
which  he  took  to  guard  against  that  danger  show  to  the  entire 
satisfaction  of  the  court  that  the  disaster  was  not  altogether 
unexpected.  As  the  ship  advanced,  the  lead  was  constantly 
employed,  showing  eight  fathoms  at  first,  then  seven,  then  six 
only,  and  so  on ;  the  depth  continuing  to  diminish  at  each 
throw  of  the  lead,  until  the  ship  grounded  and  remained  fast. 

Grant  that  the  master  did  not  intend  that  the  ship  should 
ground  on  that  reef,  still  it  is  clear  that  he  was  aware  that  such 
a  danger  was  the  chief  one  he  had  to  encounter  in  entering  the 
bay,  and  the  case  shows  that  he  deliberately  elected  and  de- 
cided to  take  that  hazard  rather  than  to  remain  outside,  where, 
in  his  judgment,  the  whole  interests  under  his  control,  and  the 
lives  of  all  on  board,  were  exposed  to  imminent  peril  if  not  to 
certain  destruction.  Under  these  circumstances  it  is  not  possi- 
ble to  decide  that  the  will  of  man  did  not  in  some  degree  con- 
tribute to  the  stranding  of  the  ship,  which  is  all  that  is  required 
to  constitute  the  stranding  a  voluntary  act  within  the  meaning 
of  the  commercial  law. 

Suppose  the  storm  outside  the  bay  was  irresistible  and  over- 
powering, still  it  does  not  follow  that  there  was  no  exercise  of 
judgment,  for  there  may  be  a  choice  of  perils  when  there  is  no 
possibility  of  perfect  safety. 

Destruction  of  all  the  interests  was  apparently  certain  if 
the  ship  remained  outside,  but  the  master  under  the  circum- 
stances elected  to  enter  the  bay  without  the  assistance  of  a 
pilot,  knowing  that  there  was  great  danger  that  the  ship  might 
ground  in  the  attempt ;  but  his  decision  was,  that  it  was  better 


436  Insurance  :    Ftkio,   TiiFE,   Marine.  o.  x. 

for  all  concerned  to  make  the  attein])t  than  to  remain  where 
he  was,  even  if  she  did  ground  :  and  the  result  shows  that  he 
decided  wisely  for  all  interests,  as  damage  I'esulted  to  none 
except  to  the  ship,  and  she  would  doubtless  have  been  de- 
stroyed if  she  had  continued  to  remain  outside  of  the  bay. 

Guided  by  these  considerations,  our  conclusion  is,  that  the 
loss  and  damage  sustained  by  the  ship  at  the  place  of  the  dis- 
aster, and  the  costs  and  expenses  of  the  repairs — and  all  the 
other  costs  and  expenses  as  charged  in  the  adjustment — are 
the  proper  subject  of  general  average  contribution,  as  alleged 
b}'  the  claimants  in  their  answer. 

Details  will  be  avoided,  as  the  decree  must  be  reversed,  and 
the  cause  remanded  for  further  proceedings. 

Brief  consideration  must  also  be  given  to  the  exceptions, 
taken  by  the  claimants,  to  the  report  of  the  commissioner, 
which  were  overruled  by  the  court. 

1.  That  the  commissioner  erred  in  assuming  that  the  valu- 
ation of  the  ship,  as  given  in  the  policy  of  insurance,  is  the 
proper  basis  of  her  contributory  value  in  the  statement  of  the 
amount  for  general  average. 

As  a  general  rule,  the  value  of  the  ship  for  contribution, 
where  she  has  received  no  extraordinary  injuries  during  the 
voyage,  and  has  not  been  repaired  on  that  account,  is  her 
value  at  the  time  of  her  arrival  at  the  termination  of  her  voy- 
age ;  but  if  she  met  with  damage  before  she  arrived,  by  perils 
of  the  sea,  and  had  been  repaired,  then  the  value  to  be  assumed 
in  the  adjustment  is  her  worth  before  such  repairs  were  made. 
Neither  party  gave  any  evidence  as  to  the  value  of  the  ship 
prior  to  the  disaster,  except  what  appears  in  the  policy  of  in- 
surance, and,  under  the  circumstances,  it  is  difficult  to  see  what 
better  rule  can  be  prescribed  than  that  adopted  by  the  com- 
missioner. 

Strictly  speaking,  the  rule  is  the  value  of  the  ship  ante- 
cedent to  the  injuries  received ;  but,  as  that  requirement  can 
seldom  be  met,  the  usual  resort  is  her  value  at  the  port  of 
departure,  making  such  deduction  for  deterioration  as  appears 
to  be  just  and  reasonable. 

No  proof  on  that  subject,  except  the  policy  of  insurance, 
was  offered  by  either  party,  and,  inasmuch  as  ships  are  seldom 
insured  beyond  their  actual  value,  the  exception  is  overruled. 


o.  X.  Star  of  Hope.  437 

2.  That  the  commissioner  erred  in  carrying  into  particular 
average  certain  expenses  incurred  by  the  master  at  the  port 
where  the  repairs  were  made,  which  should  have  been  re- 
garded as  the  proper  subject  of  general  average. 

We  think  it  plain  that  the  exception  must  be  sustained,  as 
some  of  the  matters  charged  as  particular  average,  in  whole 
or  in  part,  ought  clearly  to  have  been  included  at  theii'  full 
value  among  the  incidental  expenses  necessarily  incurred  in 
making  the  repairs. 

Whatever  the  nature  of  the  injury  to  the  ship  may  be, 
and  whether  it  arose  from  the  act  of  the  master  in  voluntarily 
sacrificing  a  part  of  it  or  in  voluntarily  stranding  the  vessel, 
the  wages  and  provisions  of  the  master,  officers,  and  crew  from 
the  time  of  putting  away  for  the  port  of  succor,  and  every  ex- 
pense necessarily  incurred  during  the  detention  for  the  benefit 
of  all  concerned,  are  general  average. 

Repairs  necessary  to  remove  the  inability  of  the  ship  to 
proceed  on  her  voyage  are  now  regarded  everywhere  as  the 
proper  subject  of  general  average.  Expenses  for  repairs,  be- 
yond what  is  reasonably  necessary  for  that  purpose,  are  not  so 
regarded. 

The  wages  and  provisions  of  the  master,  oflBcers,  and  crew 
are  general  average  from  the  time  the  disaster  occurs  until  the 
ship  resumes  her  voyage,  if  proper  diligence  is  employed  in 
making  the  repairs. 

Towing  the  ship  into  port,  and  extra  expenses  necessarily 
incurred  in  pumping  to  keep  her  afloat  until  the  leaks  can  be 
stopped,  are  to  be  included  in  the  adjustment. 

Surveys,  port  charges,  the  hire  of  anchors,  cables,  boats, 
and  other  necessary  apparatus,  for  temporary  purposes  in 
making  the  repairs,  are  all  to  be  taken  into  the  account,  as  well 
as  the  expenses  of  unloading,  warehousing,  and  reloading  the 
cargo  after  the  repairs  are  completed. 

Repairs  in  such  a  case  cannot  be  made  by  the  master  unless 
he  has  means  or  credit ;  and  if  he  has  neither,  and  his  situation 
is  such  that  he  cannot  communicate  with  the  owners,  he  may 
sell  a  part  of  the  cargo  for  that  purpose,  if  it  is  necessary  for 
him  to  do  so  in  order  to  raise  the  means  to  make  the  repairs. 
Sacrifices  made  to  raise  such  means  are  the  subject  of  general 
average,  and  the  rule  is  the  same  whether  the  sacrifice  was 


438  Insurance  :   Fire,  Life,  Marine.  6.  x. 

made  by  a  sale  of  a  part  of  the  cargo,  or  by  the  payment  of 

marine  interest. 

Governed  by  these  rules,  it  is  believed  the  rights  of  the 

parties  may  be  adjusted  vs^ithout  serious  difficulty  or  danger 

of  mistake. 

Decree  reversed. 


CHAPTEE    XL 

new  yokk  standard  fike  policnr. 

Supreme  Judicial  Court  of  Massachusetts,  1852. 
SCKIPTURE  V.  LOWELL  MUTUAL  FIRE  INS.  CO. 

(10  Cush.  356.) 
What  it  lost  hy  fire. 

Action  on  a  policy  of  insurance  on  a  dwelling-house  owned 
by  plaintiff,  but  occupied  by  one  Elbridge  Smith,  whose  minor 
son,  without  plaintiff's  knowledge,  brought  a  cask  of  gun- 
powder into  the  attic  and  fired  it  with  a  match,  doing  con- 
siderable damage. 

Perkins,  J.,  in  the  Court  of  Common  Pleas,  gave  plaintiff 
judgment  for  the  total  damage  done,  on  an  agreed  statement 
of  facts,  and  defendants  appealed  to  this  court. 

CusHiNG,  J. — The  case  finds  that  a  burning  match  being 
applied,  without  fault  of  the  plaintiff,  to  a  cask  of  gunpowder 
in  the  attic  of  his  house,  the  gunpowder  took  fire,  exploded, 
set  fire  to  a  bed  and  clothing,  charred  and  stained  some  of  the 
woodwork,  and  blew  off  the  roof  of  the  house ;  and  the  only 
question  in  the  case  is,  whether  the  loss  thus  occasioned  to  the 
building  is  covered  by  the  conditions  of  an  ordinary  policy 
against  fire.  The  question  may  be  generalized  thus :  By  the 
ignitiot  of  gunpowder  within  a  dwelling-house,  damage  is  done 
to  the  house,  that  damage  consisting  in  part  of  combustion  and 
in  part  of  explosion.  Is  the  whole  damage  covered  by  a  policy 
insuring  "  against  loss  or  damage  by  fire  ? " 

The  very  anomalous  case  of  Austin  v.  Drew,  6  Taunt.  436, 
has  been  adduced  in  argument  and  greatly  relied  upon,  as  hav- 
ing apparent  analogy  to  this ;  but  when  that  case  is  examined, 


440  Insurance  :    Fire,  Life,  Marine.  c.  xi. 

the  analogy  disappears.  The  evidence  there  was,  of  a  building 
of  several  stories,  in  each  of  which  sugar,  in  a  certain  state  of 
preparation,  was  deposited  for  the  purpose  of  being  refined; 
and  a  chimney,  running  up  through  the  building,  formed  almost 
one  whole  side  of  each  of  the  stories  ;  and  by  means  of  this 
chimney,  heat  was  communicated  to  the  several  rooms  con- 
taining the  sugar,  and  thus  acted  on  it  chemically.  At  the 
top  of  the  chimney  was  a  register  used  to  shut  in  the  heat  dur- 
ing the  night.  The  servant  of  the  assured,  in  lighting  the  fires 
in  the  morning,  neglected  to  open  the  register,  in  consequence 
of  which,  undue  heat  came  out  into  the  heating-room,  and  the 
sugars  were  thereby  injured.  And  the  action  pending,  was  to 
recover  damage  for  this  under  a  policy  of  insurance  against  loss 
by  fire. 

The  decision  in  Austin  v.  Drew  has  been  assumed  to  estab- 
lish that,  "to  bring  a  loss  within  the  risk  insured  against,  it 
must  appear  to  have  been  occasioned  by  actual  ignition,  and 
no  damage  occasioned  by  mere  heat,  however  intense,  will  be 
within  the  policy."  2  Marsh,  on  Ins.  (3d  ed.)  790.  This  propo- 
sition is  not  the  point  of  the  case ;  and  it  cannot  be  sound  law ; 
for  it  may  well  happen  that  serious  damage,  within  the  scope 
of  a  fire  policy,  shall  be  done  to  a  building,  or  to  its  contents, 
by  the  action  of  fire  in  scorching  paint,  cracking  pictures,  glass, 
furniture,  mantelpieces,  and  other  objects,  or  heating  and  thus 
actually  destroying  many  objects  of  commerce,  and  yet  all  this 
without  actual  ignition — that  is,  visible  inflammation. 

All  these  manifest  errors,  and  the  doubts  they  throw  over 
the  case  of  Austin  v.  Drew,  are  dispelled  at  once  by  the  report 
of  it  in  Holt  and  in  Campbell,  as  it  was  tried  at  Nisi  Prius. 
There  it  appears  that  the  claim  w^as  for  damage  to  the  sugars 
by  overheating  only.  And  Chief  Justice  Gibbs  said:  "lam 
of  opinion  that  this  action  is  not  maintainable.  There  was  no 
more  fire  than  always  exists  when  the  manufacture  was  going 
on.  Nothing  was  consumed  by  fire.  The  plaintiffs'  loss  arose 
from  the  negligent  management  of  their  machinery.  The 
sugars  were  chiefly  damaged  by  the  heat.  And  what  produced 
the  heat?  Not  any  fire  against  which  the  company  insured, 
but  the  fire  for  heating  the  pans,  which  continued  all  the  time 
to  burn  without  any  excess.  The  servant  forgets  to  open  the 
register  by  which  the  smoke  ought  to  have  escaped  and  the 


0.  XI.        Scripture  v.  Lowell  Mutual  Fire  Ins.  Co.  441 

heat  to  have  been  tempered."  And  when  one  of  the  jurymen 
suggested  that  fires  arising  from  negligence  of  servants  were 
covered  by  fire  policies,  Chief  Justice  Gibbs  assented,  and  said 
it  was  not  the  case  of  a  fire  arising  from  negligence,  for  there 
was  no  fire  except  where  it  ought  to  have  been ;  but  it  was  the 
case  of  the  damage  of  an  article  in  the  process  of  manufacture 
by  the  unskillful  management  of  the  fire  used  as  an  agent  of 
the  manufacture.  Austin  v.  Drew^  4  Campb.  360 ;  Holt  N. 
P.  126. 

If,  in  Austin  v.  Drew,  the  fire  had  been  where  it  ought  not 
to  be,  if,  even  with  careless  management,  it  had  burned  the  build- 
ing, and  notwithstanding  it  was  fire  maintained  only  for  the 
purpose  of  manufacture,  then  all  the  observations  of  the  court 
go  to  show  that,  in  this  instance,  as  in  that  of  the  whaleship 
mentioned  in  Emerigon  (1  Tr.  de  Ass.  436),  the  insurers  would 
have  been  held  to  be  liable  for  the  loss.  This,  therefore,  and 
this  only,  as  correctly  stated  by  Beaumont  (Ins.  37),  is  decided 
by  the  case  of  Austin  v.  Drew ;  namely,  that  where  a  chemist, 
artisan,  or  manufacturer,  employs  fire  as  a  chemical  agent,  or 
as  an  instrument  of  art  or  fabrication,  and  the  article,  which  is 
thus  purposely  subjected  to  the  action  of  fire,  is  damaged  in 
the  process  by  tlie  unskillfulness  of  the  operator,  and  his  mis- 
management of  heat  as  an  agent  or  instrument  of  manufacture, 
that  is  not  a  loss  within  a  fire  policy.  This,  we  apprehend,  is 
good  policy  and  sound  law.  But  it  does  not  touch  at  all  the 
present  case.  It  has  been  thought  proper  thus  to  analyze  the 
case  of  Austin  v.  Drew,  because,  having  been  variously  reported 
by  four  different  reporters,  and  presenting  itself  prominently 
in  several  of  the  text-books,  but  in  nearly  all  of  them  with 
more  or  less  of  misconception,  it  has  become  the  starting  point, 
in  legal  construction,  of  conflicting  lines  of  argument  leading 
to  sundry  false  conclusions,  and,  among  others,  that  of  a  sup- 
posed application  to  the  present  question. 

Some  adjudications  have  also  been  cited  of  questions  arising 
in  the  contingency  of  damage  done  by  lightning.  Thus,  in 
Kennistoji  v.  Merrimack  Insurance  Company,  the  Supreme 
Court  of  New  Hampshire  decided  that  damage  done  by  lightr. 
ning,  without  any  combustion  to  indicate  the  presence  of  fire, 
\s  not  within  the  terms  of  a  policy  against  "  fire  by  accident, 
lightning,  or  by  any  other  means  "  ;  the  court,  in  a  brief  opin- 


443  Insurance  :   Fire,  Life,  Marinb.  a  xl 

ion,  deducing  the  conclusion  from  the  assumed  premises  that 
lightning^^r  «^  is  not  fire.  14  N.  H.  341.  The  same  conclu- 
sion, upon  similar  facts  and  upon  the  same  words  of  insurance, 
"  fire  by  lightning,"  is  elaborately  reasoned  out  in  a  recent  case 
in  New  York,  Babcock  v.  Montgomery  County  Insurance  Com- 
pany, 6  Barb.  637 ;  where  it  is  held,  that,  to  constitute  a  loss 
within  the  policy,  there  must  be  fire,  or  burning,  and  that 
damage  by  lightning  in  other  forms  is  not  the  risk  intended  by 
the  contract ;  because,  though  caloric  may  generate  electricity, 
or  electricity  caloric,  yet  caloric  and  electricity  are  distinct 
things  in  nature. 

The  principle  adjudged  in  the  cases  of  this  class  will  be 
readily  seen  by  reversing  the  question.  Suppose,  not  as  fact 
but  as  mere  supposition,  a  policy  insuring  against  damage 
done  through  electricity  generated  by  caloric.  Obviously,  this 
would  not  cover  damage  done  by  fire  only,  electricity  not 
being  evolved.  So,  in  the  actual  case  reported,  of  insurance 
against  fire  produced  by  lightning,  if  the  effects  be  of  lightning 
only,  without  exhibition  of  fire,  it  would  not,  according  to  the 
above  decision,  be  within  the  policy.  Or  suppose  insurance  on 
cattle  against  the  risk  of  death  by  fire  alone.  In  that  assump- 
tion, if  the  cattle  die,  as  they  may,  by  a  stroke  of  lightning, 
without  a  burn  or  any  other  action  of  fire  on  their  bodies,  it 
would  not  be  the  risk  contemplated  by  the  contract.  Beau- 
mont on  Ins.  37. 

The  question  of  loss  by  lightning  is  very  summarily  dis- 
posed of  in  the  older  authorities  by  treating  electricity  as  fire 
from  heaven.  See  1  Emerigon,  c.  12,  §  17,  No.  1,  and  the 
authors  there  cited.  But  the  progress  of  knowledge  has  led  to 
juster  notions  of  the  nature  of  lightning,  and,  of  course,  to  dif- 
ferent conclusions  touching  its  legal  relations,  which  are  cor- 
rectly summed  up  by  a  late  writer  as  follows :  namely,  that 
fire  includes  lightning  if  there  be  any  mark  of  fire,  but  not 
otherwise.     Beaumont  on  Ins.  37. 

These  cases  of  damage  by  lightning  bear  on  the  present 
question,  therefore,  if  at  all,  only  by  very  distant  analogy. 
Neither  of  them  covers  it  or  has  any  direct  relation  to  it.  To 
the  contrary  of  this,  in  New  York,  at  least,  the  same  courts 
which  decide  that  loss  by  lightning  merely  is  not  covered  by  a 
fire  policy,  decide  that  loss  by  the  explosion  of  gunpowder  is. 


0.  XI.        Scripture  v.  Lowell  Mutual  Fire  In8.  Co.  443 

There  is  a  series  of  cases  precisely  in  point  which  expressly 
decide,  or  by  implication  assume,  that  damage  done  by  the 
explosion  of  gunpowder  ignited  within  a  building,  as  Avell  as 
that  done  by  its  combustion,  is  within  the  risk  of  a  fire  policy. 
The  case  of  Grim  v.  Phmnlx  Insurance  Company  was  this : 
A  vessel,  insured  against  fire,  was  partly  laden  with  gun- 
powder, which,  being  ignited  by  carelessness,  the  vessel  was 
blown  up  and  totally  lost.  It  was  argued  by  eminent  counsel, 
and  the  opinion  was  given  b}^  Thompson,  C.  J.,  and  throughout 
the  case  it  seems  to  be  assumed  that  the  loss  was,  in  respect 
to  its  cause,  within  the  policy,  and  the  decision  was  made  to 
depend  on  other  considerations,  13  Johns.  451.  The  same  con- 
clusion is  also  assumed  in  the  case  of  Duncan  v.  Sun  Fire  In- 
surance Compa7iy,  6  Wend.  488.  In  the  case  of  City  Fire 
Insurance  Company  v.  Corlies^  the  claim  was  on  a  fire  policy 
for  merchandise  destroyed  not  in  burning,  but  through  the 
blowing  up  of  the  building  wherein  it  was  stored,  by  means  of 
gunpowder ;  and  the  court  expressly  adjudged  this  to  be  "  a 
loss  by  the  peril  insured  against,  within  the  meaning  of  the 
policy."     21  Wend.  367. 

The  question,  we  admit,  is  a  nice  one.  Upon  careful  reflec- 
tion, however,  we  have  come  to  the  conclusion  that  the  re- 
ceived opinions  on  the  subject  and  the  adjudications  referred  to 
are  in  accordance  with  reason  and  principle.  It  seems  not  to 
be  denied  that  actual  combustion,  produced  by  the  ignition  of 
gtmpowder,  is  within  the  present  policy.  If,  then,  a  com- 
bustible substance  in  the  process  of  combustion  produces  ex- 
plosion also,  it  is  not  easy  to  perceive  why,  of  the  two  diverse 
but  concurrent  results  of  the  combustion,  the  one  should  be 
ascribed  to  fire  any  less  than  the  other.  The  plain  fact  here  is 
the  application  of  fire  to  a  substance  susceptible  of  ignition,  the 
consequent  ignition  of  that  substance,  and  immediate  damage 
to  the  premises  thereby.  It  is  no  sufficient  answer  to  say  that 
some  of  the  phenomena  produced  are  in  the  form  of  explosion. 
All  the  effects,  whatever  they  may  be  in  form,  are  the  natural 
results  of  the  combustion  of  a  combustible  substance ;  and,  as 
the  combustion  is  the  action  of  fire,  this  must  be  held  to  be  the 
proximate  and  legal  cause  of  all  the  damage  done  to  the  prem- 
ises of  the  plaintiff. 

Our  opinion  excludes,  of  course,  all  damage  by  mere  explo- 


444  iNstJKANCE :    Fire,  Life,  Makinb.  o.  xi. 

sion,  not  involving  ignition  and  combustion  of  the  agent  of 
explosion,  such  as  the  case  of  steam,  or  any  other  substance 
acting  by  expansion  without  combustion.  See  Perrin^s  Admin- 
istrator V.  Protection  Insurance  Co.,  11  Ohio,  146.  It  likewise 
excludes  all  damage  occasioned  but  remotely  or  consequentially 
through  the  agency  of  gunpowder,  such  as  injury  done  to  a 
house  by  falling  fragments  in  the  blasting  of  rocks,  or  the 
shattering  of  a  house  by  the  stroke  of  a  cannon-ball,  in  which 
examples  the  shock  of  a  projectile,  and  not  ignition  or  combus- 
tion, is  the  proximate  cause  of  the  damage  done.  "We  recognize 
and  accept,  in  the  full  force  of  its  application,  the  maxim:  In 
jure  non  remota  causa  sed proxima  sjpectatur.  Bacon's  Max.  1. 
The  legal  relations  of  marine  insurance  have  been  copiously 
discussed  in  many  express  treatises  of  elaborate  erudition,  and 
are  considered  in  a  great  number  of  judicial  decisions,  in  which 
the  whole  subject  has  been  explored  with  wonderful  acuteness 
and  comprehension  of  logic  and  of  learning ;  while  fire  insur- 
ance, as  a  branch  of  legal  knowledge,  is,  comparatively  speak- 
ing, in  its  rudiments.  The  cases  on  marine  insurance  throw 
little  if  any  light  on  the  present  question,  except  in  so  far  as 
they  attempt  to  prescribe  a  rule  for  distinguishing  between 
what  is  remote  and  what  is  proximate  cause.  The  conclusion 
reached  in  this  discussion,  as  may  be  seen  by  the  latest  investi- 
gation of  the  point  in  Great  Britain,  Montoya  v.  London 
Assiorance  Co.,  6  Exch.  451,  is  that,  while  for  most  cases  it  is 
practicable  to  draw  the  line,  and  to  formalize  a  rule  between 
the  two  classes  of  causes,  yet,  in  other  cases,  according  to  the 
general  law  of  nature,  the  two  classes  approach  and  run  into 
one  another  until  the  distinction  vanishes  ;  and  within  the 
limits  of  this  debatable  land  of  differences,  it  is  necessary  to 
apply  judicial  discretion  to  the  particular  questions  as  they 
arise,  just  as  it  is  in  the  not  infrequent  inquiry  whether  a 
thing,  or  the  use  or  measure  of  it,  be  reasonable  or  not.  In 
Montoya  v.  London  Asstirance  Co.,  it  was  determined  that, 
where  the  lower  part  of  a  cargo  is  damaged  by  sea  water  and, 
by  the  evolution  of  gases  from  the  part  thus  damaged  or  the 
propagation  of  heat  arising  from  fermentation,  the  superior 
part  of  the  cargo  be  damaged  also,  the  loss  on  the  latter  is  by 
the  perils  of  the  sea,  the  involvement  of  the  secondary  effect  in 
the  primary  one  being  an  example  of  causa  proxima. 


0.  XI.         Scripture  v.  Lowell  Mutual  Fire  Ins.  Co.  446 

In  the  present  case  there  is  no  room  for  question  concerning 
a  series  of  causes,  as  whether  primary  or  secondary,  proximate 
or  remote ;  for  the  agent  is  one  and  the  same  throughout, 
namely,  fire.  The  causa  was  burning  powder  ;  the  causa  cau- 
sans  was  a  burning  match  ;  at  each  stage  of  causation  it  was 
the  action  of  fire.  Nay,  to  be  exact,  the  burning  of  the  gun- 
powder, hke  the  burning  of  the  match,  was  a  succession  of 
several  complex  acts  of  burning,  yet  fire  is  the  agent  at  each  of 
these  distinct  stages  of  causation.  Suppose  there  was  a  barrel 
of  sulphur  in  the  plaintiff's  attic  instead  of  gunpowder,  and 
this  being  ignited  with  a  match,  afterwards  the  fire  had  passed 
from  the  burning  sulphur  to  the  substance  of  the  house.  This 
would  be  recognized  at  once  as  a  case  of  fire.  It  does  not 
chansre  the  leo-al  relation  of  causes  to  substitute  a  barrel  of 
burning  gunpowder  for  a  barrel  of  burning  sulphur.  The  only 
difference  in  the  elements  of  the  question  is,  that  the  gun- 
powder, when  ignited,  consumes  with  more  of  rapidity  than 
sulphur,  and  the  combustion  is  accompanied  or  followed  by 
explosion.  Still,  the  agent  is  fire,  though  it  acts  in  different 
ways  upon  the  different  successive  subjects  of  its  action,  begin- 
ning with  the  match  and  terminating  with  the  plaintiff's 
house. 

On  the  other  hand,  cases  are  conceivable,  other  than  by  the 
use  of  gunpowder,  of  explosion  without  any  combustion,  which, 
nevertheless,  being  the  result  of  the  action  of  fire,  are  still,  it 
would  seem,  within  the  range  of  the  general  principle.  Various 
mineral  substances  exist,  of  value  in  commerce  and  the  arts, 
which  explode  by  the  action  of  fire,  without  either  ignition 
or  combustion.  In  general,  any  close  vessel  of  whatever 
material  composed,  when  filled  with  an  expansive  fluid,  is  liable 
to  explode  by  the  action  of  heat,  though  it  may  be  that  the 
vessel  and  its  contents  are  alike  incombustible.  The  same  thing 
happens,  under  certain  conditions,  to  some  forms  of  wood  ; 
which,  although  combustible,  may  by  the  action  of  fire  explode, 
without  ignition ;  or  which,  as  in  the  present  case,  of  a  house, 
by  having  compressed  within  it  some  burning  substance,  which 
is  explosive  as  well  as  combustible,  like  gunpowder,  may  suffer 
the  double  injury  of  combustion  in  part  and  in  part  of  explosion. 

If,  however,  the  question  of  consequential  damage  needed 
to  be  explored  for  the  determination  of  the   present  case,  it 


446  Insurance  :   Firk,  Life,  Marine.  o.  xi. 

would  serve  to  confirm  the  conclusion  at  which  we  have  on 
other  premises  arrived.  Thus,  in  Great  Britain,  damage  which 
occurs  consequentiall}^  in  the  case  of  a  fire,  by  reason  of  confu- 
sion of  mind,  as  in  throwing  fragile  objects  out  of  the  window, 
or  by  sudden  terror  from  alarm,  as  in  leaving  open  the  top  of 
a  barrel,  and  thus  wasting  the  contents,  is  held  to  be  loss  by 
fire,  according  to  the  usages  of  insurance  offices  or  established 
legal  principle.  Beaumont  on  Ins.  41.  So  it  is  in  the  case  of 
a  beam,  cornice,  or  coving,  removed  to  prevent  the  spread  of 
conflagration,  md.  We  understand  the  same  to  be  the  rule, 
in  the  case,  for  instance,  of  a  fire  in  the  upper  story  of  a  build- 
ing, and  the  destruction  or  damage  of  goods  in  a  lower  story, 
not  by  fire,  but  by  the  water  thrown  into  or  upon  the  building 
for  the  purpose  of  extinguishing  the  fire.  All  these  are  fit 
illustrations  of  the  question  of  merely  consequential  damage. 

In  the  hypothesis  that  fire  is  to  be  regarded  as  causa proxima 
in  the  present  case  we  can  see  but  one  supposable  defect ;  namely, 
the  suggestion  that,  though  it  be  conceded  that  the  explosion 
of  burning  gunpowder,  and  its  effects,  are  the  action  of  fire,  yet 
this  particular  effect  on  the  building  is  not  exhibited  in  the 
form  of  igneous  action.  The  cases  above  supposed,  of  the 
shrivelling  of  some  masterpiece  of  pictorial  art,  the  cracking  or 
discoloration  of  a  rich  vase  or  gem,  the  bursting  of  a  cask  of 
wine  through  the  expansion  of  its  contents,  these,  it  may  be 
said,  are  distinctly  cases  of  damage,  without  ignition  it  is  true, 
but  by  the  direct  and  specific  action  of  heat  as  such  ;  while  it 
is  denied  that  such  is  the  fact  in  the  present  case  of  the  blow- 
ing up  of  a  dwelling-house  by  the  ignition  of  gunpowder.  We 
do  not  think  the  premises  of  this  argument  are  sustained  by  the 
physical  facts  which  occurred.  If  they  were  so,  then  the  near- 
est analogy  would  be  of  damage  by  smoke ;  that  is,  the  moisture 
thrown  off  by  burning  wood,  and  carrying  with  it  ashes,  empy- 
reumatic  oil,  and  other  constituent  parts  of  the  wood,  either 
in  their  natural  condition,  or  transformed  by  the  process  of 
combustion.  Now  it  is  obvious  that  mere  smoke,  without  any 
direct  action  of  heat,  may  do  great  damage  to  many  kinds  of 
merchandise,  such  as  delicate  textile  fabrics,  esculent  vegetables, 
articles  of  taste,  and  other  numerous  objects  ;  and  if  a  dwelling 
or  a  magazine  take  fire,  and  some  parts  of  it  only  be  consumed, 
but  the  contents  of  apartments,  to  which  the  actual  fire  doesj 


c.  XI.        Lyons  v.  Providence  Washington  Ins.  Co.  447 

not  extend,  are  nevertheless  damaged  by  the  smoke  penetrating 
into  and  filhng  them,  can  it  be  doubted  that  the  damage  thus 
done  is  a  loss  within  the  ordinary  conditions  of  a  lire  policy  ? 
Semhle,  per  Gibbs,  Chief  Justice,  arguendo^  in  Austin  v.  Drew, 
Holt  N.  P.  127.  Yet,  incontestably,  damage  by  smoke  is  an 
effect,  which  is  not  in  itself  igneous  action,  though  it  be  the 
result  thereof ;  while,  as  we  conceive,  the  explosion  of  gun- 
powder is  igneous  action. 

In  conclusion,  we  think  the  rule,  which  we  propose  for  the 
present  case,  reconciles  all  the  conditions  involved  in  the  ques- 
tion ;  is  conformable  to  the  nature  of  things ;  and  constitutes 
a  coherent  and  consistent  doctrine,  namely,  that  where  the 
effects  produced  are  the  immediate  results  of  the  action  of  a 
burning  substance  in  contact  with  a  building,  it  is  immaterial 
whether  these  results  manifest  themselves  in  the  form  of  com- 
bustion, or  of  explosion,  or  of  both  combined.  In  either  case, . 
the  damage  occurring  is  by  the  action  of  fire,  and  covered  by 
the  ordinary  terms  of  a  policy  against  loss  by  fire. 

Judgment  for  the  plaintiff. 

Supreme  Court  of  Rhode  Island,  1883. 
LYONS  V.   PROVIDENCE  WASHINGTON   INS.   CO. 

(14  R.  I.  110.) 

Location,  when  material. 

Carpenter,  J. — The  plaintiff  proved  in  the  trial  of  this  case 
in  the  Court  of  Common  Pleas  that  she  procured  from  the  de- 
fendant a  policy  of  insurance  against  fire,  on  certain  articles  of 
furniture  and  wearing  apparel,  described  in  the  policy  as  "  All 
contained  in  house  No.  — ,  McMillen  Street,  Providence,  R.  I. ;  " 
that  at  the  time  of  the  fire  the  articles  had  been  removed  and 
were  in  a  house  on  Power  Street,  where  the  fire  occurred  ;  that 
the  defendants  had  never  been  informed  of  the  removal ;  that 
she  never  told  them  of  the  removal,  and  did  not  think  it  was 
necessary  to  tell  them,  and  that  at  the  time  she  procured  the 
policy  of  insurance  she  owned  the  house  on  McMillen  Street, 
in  which  the  articles  insured  then  were.  In  this  state  of  the 
proof  the  defendant  requested  the  presiding  justice  to  instruct 


448  Insurance  :   Fire,  Life,  Marine.  a  xi. 

the  jury  that  the  permanent  removal  of  the  goods  insured  from 
the  house  on  McMillen  Street  to  the  house  on  Power  Street, 
without  the  knowledge  and  assent  of  the  defendant  corporation, 
terminated  the  contract  of  insurance,  and  that  the  plaintiff 
could  not  recover.  The  presiding  justice  refused  such  instruc- 
tion, whereupon  a  verdict  was  returned  for  the  plaintiff,  and 
the  defendant  brings  this  bill  of  exceptions. 

There  seems  to  be  no  doubt  that  if  this  question  were  to  be 
decided  on  authority,  it  must  be  taken  as  the  general  rule  that 
all  the  material  statements  of  the  policy  of  insurance,  including 
statements  as  to  the  place  in  which  the  insured  property  is 
situate,  are  warranties,  and  that  such  warranties  must  be  true 
and  must  continue  to  be  true  during  the  whole  life  of  the  policy 
as  the  condition  of  any  recovery  thereunder,  Eddy  Street  Iron 
Foundry  v.  Hampden  Stock  and  Mntual  Ins.  Co.,  1  Cliff.  300  ; 
Shertzer  v.  Midual  Fire  Ins.  Co.  of  Hartford  County.^  46  Md. 
506 ;  Wall  v.  East  River  Mutual  Ins.  Co.,  3  Seld.  370 ;  Hart- 
ford Fire  Ins.  Co.  v.  Farrish,  Y3  111.  166. 

The  plaintiff,  however,  contends  that  this  case  comes  within 
an  exception  to  the  general  rule.  The  argument  is,  that  inas- 
much as  the  insured  property  is  household  and  personal  effects, 
and  inasmuch  as  it  is  matter  of  common  knowledge  that  cer- 
tain persons  do  at  times  change  their  place  of  abode,  carrying 
with  them  such  of  their  effects  as  are  of  the  kind  here  insured, 
therefore,  it  is  to  be  presumed  that  the  defendant  issued  the 
policy  in  suit  with  the  knowledge  and  expectation  that  the  plain- 
tiff might  make  such  removal  during  the  term  of  the  insur- 
ance, and  with  the  implied  agreement  that  she  might  make 
such  removal  without  vitiating  the  policy.  There  is,  indeed, 
to  be  deduced  from  the  cases  an  exception  to  the  general  rule 
as  above  stated  ;  but  we  do  not  think  that,  either  in  reason  or 
on  authority,  it  goes  to  the  extent  claimed  by  the  plaintiff. 
Briefiy  stated,  the  rule  seems  to  be  that  the  temporary  re- 
moval of  property,  whether  occasional  or  habitual,  in  pur- 
suance of  a  use  which  is  a  "  certain  necessary  consequence  " 
arising  from  the  character  of  the  property,  without  any  change 
in  the  ordinary  place  of  keeping,  will  be  no  defense  to  an  ac- 
tion on  the  policy.  The  reasoning  of  Lord  Mansfield,  although 
in  case  of  marine  insurance,  applies  exactly  to  this  question. 
PelVy  V.  Qovernor  (&  Company  of  the  Royal  Exchange  Assur- 


0.  XI.         Lyons  v.  Providence  Washington  Ins.  Co.  449 

cmce,  1  Burr.  341  ;  Holhrook  v.  St.  Paul  Fire  <j&  Marine  Ins. 
Co.,  25  Minn.  229. 

The  plaintiff  further  contends  that  the  general  rule  above 
laid  down  is  not  founded  in  justice  and  sound  reason,  and  ought 
not  to  be  adopted  in  this  case.  The  argument  is,  that  no  person 
not  learned  in  the  purport  of  judicial  decisions  could  know  or 
infer  that  the  words  of  the  policy  above  quoted,  which  are  in 
appearance  merely  descriptive,  imported  a  warranty ;  and 
that,  therefoi'e,  they  should  not  now  be  so  construed.  We  can- 
not agree  with  this  argument.  We  must  assume  that  the 
words  of  a  written  instrument  conveyed  to  the  minds  of  the 
parties  to  that  instrument  the  meaning  and  effect  which  have 
been  imputed  to  those  words  by  well-established  judicial  deter- 
minations. Undoubtedly  such  determinations,  if  they  are  to 
remain  as  authority,  must  appear  to  be  based  on  the  words 
themselves,  or  on  something  in  the  nature,  circumstances,  or 
relations  of  the  parties  or  of  the  contract.  We  think  the  in- 
terpretation of  the  words  of  this  policy  as  a  warranty  is  well 
drawn  from  the  nature  of  the  contract  of  insurance.  It  must 
be  evident  to  any  person  who  at  all  considers  the  nature  of 
that  contract,  that  the  amount  to  be  charged  for  premium 
must  vary  on  consideration  of  the  location  of  the  property  to 
be  insured  ;  and  but  small  reflection  would  be  necessary  to  per- 
ceive that  the  removal  of  the  property  to  another  place  might 
be  greatly  to  the  disadvantage  of  the  insurer,  although  such 
new  place  of  deposit  might  not  be  in  itself  more  exposed  to 
damage  from  fire,  since  the  result  of  such  removals,  if  per- 
mitted to  a  considerable  extent,  might  be  to  expose  an  undue 
proportion  of  his  capital  to  the  risks  of  a  single  conflagration. 

Exceptions  sustained. 


CHAPTEK   XII. 
olaubbs  or  the  new  yokk  standard  fire  policy oontinumx 

New  York  Court  of  Appeals,  1881. 
LANDERS  V.  WATERTOWN  FIRE  INS.  CO. 

(86  N.  Y.  414.) 
Other  insurance,  valid  or  invalid. 

Andrews,  J. — The  policy  on  which  this  action  is  brought, 
was  issued  on  or  about  August  1,  1873,  and  contains  a  condi- 
tion that,  "  if  the  assured  shall  have,  or  shall  hereafter  make, 
any  other  insurance  on  the  property  hereby  insured,  not  in- 
dorsed hereon,  or  consented  to  by  this  company  or  its  author- 
ized agent,  in  writing,  this  policy  shall  be  void."  The  answer 
avers  a  breach  of  this  condition,  and  alleges  that,  at  the  time 
the  policy  was  issued,  the  house  insured  was  covered  by  a 
prior  policy,  issued  to  the  plaintiff  in  the  Glens  Falls  Insur- 
ance Company,  for  $800,  terminating  May  1,  1874,  the  exist- 
ence of  which  was  not  communicated  to,  or  known  by  the 
defendant.  It  was  proved  that  the  plaintiff,  in  May,  1871,  pro- 
cured an  insurance  on  the  house,  in  the  Glens  Falls  Insurance 
Company,  for  $800,  for  the  term  of  three  years  from  May  1, 
1871,  not  indorsed  on  the  policy  in  suit,  or  consented  to  by  the 
defendant,  or  its  authorized  agent,  in  writing.  The  policy  in 
the  Glens  Falls  Company  contained  a  condition,  that,  if  the 
insured  premises  should  become  vacant,  and  unoccupied,  or  the 
risk  should  be  increased,  by  the  erection  or  occupation  of 
neighboring  buildings,  or  by  any  means  whatever,  without  the 
consent  of  the  insurer,  indorsed  on  the  policy,  it  should  be  void. 

The  answer  made  on  the  trial  to  the  defense  of  prior  msur- 
ance  was,  that,  after  the  policy  in  the  Glens  Falls  Company 
waji  issued,  the   house  remained    vacant   for  several   months 


0.  XII.  Landers  v.  Watertown  Fire  Ins.  Co.  451 

without  the  consent  of  the  insurer,  and  that  the  risk  had  been 
increased  by  the  plaintiff's  having  put  into  a  mill,  near  the 
insured  premises,  an  engine  and  boiler.  The  vacancy,  and  the 
increase  of  risk  by  the  putting  in  of  the  engine  and  boiler, 
were  proved.  The  policy  in  the  Glens  Falls  Company  had 
not,  however,  been  canceled  by  the  company,  nor  did  it  appear 
that  the  company  knew  of  the  vacancy,  or  increase  of  risk. 
The  plaintiff  did  not  discover  the  provision  in  the  policy  of 
the  Glens  Falls  Company,  avoiding  it  for  these  causes,  until 
after  the  fire.  He  procured  the  policy  in  the  defendant's  com- 
pany, for  the  reason  that  he  supposed,  although  erroneously, 
that  the  term  for  which  the  policy  in  the  Glens  Falls  Com- 
pany was  issued  had  expired,  or  was  about  expiring. 

The  court,  on  the  trial,  overruled  the  defense  based  on  the 
prior  insurance,  on  the  ground  that  the  policy  in  the  Glens 
Falls  Company  had  become  void,  in  consequence  of  the  vacancy 
and  increase  of  risk,  and,  consequently,  that  there  was  no  prior 
insurance  when  the  defendant's  policy  was  issued.  In  this 
ruling,  the  court,  we  think,  erred. 

The  prior  policy  was  valid  when  issued,  but  was  avoidable 
by  the  company  issuing  it,  for  breach  of  condition  subsequent. 
But  the  company  had  not  elected  to  avoid  it  for  that  reason. 
It  was  not  certain  that  it  would  have  so  elected,  if  the  facts 
had  been  known  to  it.  In  some  cases,  it  might  be  very  inequi- 
table for  a  company  to  take  advantage  of  the  breach  of  a 
condition  as  to  vacancy,  or  increase  of  risk,  to  avoid  a  policy 
originally  valid,  although  the  legal  right  so  to  do  might  be 
unquestionable.  It  certainly  would  be  competent  for  a  com- 
pany to  waive  such  an  objection.  The  first  policy  was  void- 
able only  at  the  election  of  the  company.  The  condition  was 
inserted  for  its  benefit,  but  its  violation  did  not,  ipso  facto, 
extinguish  the  policy.  The  condition  in  the  defendant's  policy 
was  inserted  to  protect  it  from  the  hazard  of  over-insurance, 
and  the  existence  of  the  policy  in  the  Glens  Falls  Company 
was  a  breach  of  the  condition. 

No  question  arises  in  this  case  as  to  the  rule  in  case  the 
prior  policy  had  been  void  in  its  inception,  by  non-performance, 
by  the  insured,  of  a  condition  precedent. 

It  is  claimed  that  the  defendant's  agent,  when  the  applica- 
tion for  the  policy  in  suit  was  made,  knew  of  the  existence  of 


462  Insurance  :    Fike,  Life,  Marine.  o.  xil 

the  policy  in  the  Glaus  Falls  Company.     The  defense  of  prior 

insurance  was  not  disposed  of  on  this  point.     That  question 

may  be  passed  upon  on  a  new  trial. 

The  judgment  should  be  reversed  and  a  new  trial  granted, 

costs  to  abide  event. 

All  concur. 

Judgment  reversed. 

New  York  Court  of  Appeals,  1874. 
WILLIAMS   V.   PEOPLE'S   FIRE   IN"S.   CO. 

(57  N.  T.  274.) 
Increase  of  risk. 

DwiGHT,  C. — The  only  point  which  it  will  be  necessary  to 
consider,  in  the  present  case,  is,  whether  the  judge  at  the  trial 
erred  in  refusing  to  submit  to  the  jur}^  the  question,  whether 
there  had  been  a  violation  of  the  conditions  of  tlie  insurance 
policy,  insuring  the  plaintiff's  goods,  by  reason  of  an  increase 
of  the  risk,  owing  to  the  plaintiff's  own  act. 

The  condition  in  the  policy,  which  is  claimed  by  the 
defendant  to  have  been  violated  by  the  plaintiff,  is  as  follows : 
"  If,  after  insurance  has  been  effected,  either  by  the  original 
policv  or  the  renewal  thereof,  the  risk  shall  he  increased  by 
any  means  whatever  within  the  control  of  the  assured,  or  if 
such  building  or  premises  shall  be  occupied  in  any  way,  so  as 
to  render  the  risk  more  hazardous  than  at  the  time  of  insuring, 
such  insurance  shall  be  void  and  of  no  effect." 

The  facts  of  the  case,  so  far  as  it  is  necessary  to  detail  them, 
as  bearing  on  an  alleged  increase  of  risk,  show  that  tlie  prop- 
erty insured  was  merchandise,  contained  in  a  brick  building, 
known  as  307  Broadway,  in  the  city  of  New  York.  The  goods 
were  in  a  room  in  the  third  story.  The  plaintiff  used  the  room 
for  the  purposes  of  his  business,  and  also  as  a  sleeping-room. 
Its  dimensions  were  thirteen  feet  by  six  feet  eight  inches. 
There  was  a  stove  in  the  room,  in  which  fires  were  kindled 
from  time  to  time.  The  plaintiff  kept  in  this  room  a  jug  of 
crude  petroleum.  It  stood  on  a  shelf  eight  or  ten  feet  from 
the  stove,  and  w^ould  hold  a  gallon  or  more.  The  petroleum 
was  used  for  medicinal  purposes,  and,  in  particular,  to  cure  an 


o.  XII.  Williams  v.  People's  Fire  Ins.  Co.  453 

eruption  of  the  skin.  When  he  used  the  petroleum,  he  would 
stand  naked  before  the  fire  in  the  stove,  and  rub  himself  with 
the  oil.  He  had  done  this,  from  time  to  time,  for  five  or  six 
months,  before  the  fire.  The  shirt  and  drawers  which  he  wore, 
after  making  the  application,  having  become  saturated  with 
the  petroleum,  he  cast  into  a  box  in  the  room,  having  a  lid  upon 
it.  He  had  worn  articles  of  this  kind  two  nights  before  the 
fire.  He  had  made  an  application  of  the  petroleum  to  his  per- 
son on  the  afternoon  of  January  30,  1868,  and  left  his  place  at 
five  o'clock  in  the  afternoon.  On  this  occasion,  he  had  rubbed 
the  oil  upon  his  person  before  the  fire  in  the  stove,  as  usual. 
The  merchandise  was  found  to  be  on  fire  on  the  morning"  of 
January  31,  at  two  and  a  half  o'clock.  The  petroleum  jug  con- 
tained at  the  time  about  two  quarts  of  the  oil,  and  was  stand- 
ing on  the  shelf,  withou*"  a  cork.  The  flames  did  not  set  the 
oil  on  fire.  The  saturated  clothing  was  not  burned  or  injured. 
The  unburned  goods  were  thrown  together  in  a  pile  after  the 
fire.  There  was  found  in  the  mass,  besides  the  clothing  referred 
to,  some  balls  saturated  with  turpentine  or  kerosene,  and  there 
was  a  strong  smell  of  those  substances  in  the  room.  There 
was  evidence  given  by  a  refiner  and  dealer  in  petroleum  oils, 
and  who  gave  testimony  as  an  expert,  that  crude  oil  was  highly 
dangerous,  and  apt  to  give  off.  by  evaporation,  volatile  gases 
which  would  readily  take  tire.  He  stated  that  there  was  no 
comparison,  as  to  danger,  between  the  crude  and  the  volatile 
oil.  He  declared  that  it  was  dangerous  to  strike  a  match  in  a 
close  room,  owing  to  the  presence  of  the  gases  and  their  liabil- 
ity to  take  fire.  He  added  that  the  danger  would  be  much 
increased  by  the  presence  of  garments  saturated  with  the  oil, 
as  there  would  be  more  surface  exposed  for  evaporation,  and 
that,  in  his  view,  there  was  danger  from  the  circumstances  of 
the  present  case.  Other  experts,  called  by  the  plaintiff,  wholly 
contradicted  this  view.  It  appeared  that  the  defendant  did  not 
know  of  the  use  of  the  petroleum,  and  did  not  take  risks  where 
petroleum  was  used,  except  at  very  high  rates.  It  belonged  to 
the  class  of  prohibited,  or,  at  the  least,  to  specially  hazardous 
articles.  Under  these  facts,  the  question  should  have  been  left 
to  the  jury,  whether  the  acts  of  the  plaintiff  had  not  "  increased 
the  risk  "  under  the  condition  in  the  policy. 

The  effect  of  this  clause  has  been  frequently  considered  by 


454  Insurance  :    Fire,  Life,  Marine.  o.  xii. 

the  courts.  It  differs  from  that  class  of  conditions  which  refer 
to  a  state  of  things  existing  at  the  time  of  the  execution  of  the 
pohcy.  It  looks  wholly  to  tiie  future,  and  solely  concerns  the 
conduct  of  the  assured.  It  binds  him  to  a  rigorous  course  of 
conduct  as  to  the  observance  of  existing  precautions  and  the 
introduction  of  new  sources  of  danger.  The  bearing  of  it  is 
well  stated  by  Chief  Justice  Shaw  in  Houghton  v.  Manufac- 
turers' Mutual  Fire  Insui^ance  Co.,  8  Metcalf,  114,  122.  The 
clause  in  that  case  was  not  pr-ecisely  in  form  like  the  one  now 
under  discussion,  but  was  substantially  the  same.  The  court 
said  :  "  This  provision  binds  the  assured  not  only  not  to  make 
any  alteration  or  change  in  the  structure  or  use  of  the  property 
which  will  increase  the  risk,  but  prohibits  them  from  introduc- 
ing any  practice  or  custom  or  mode  of  conducting  their  busi- 
ness which  would  materially  increase  the  risk,  and  also  from 
the  discontinuance  of  any  precaution  represented  in  the  appli- 
cation to  be  adopted  and  practiced  with  a  view  to  diminish  the 
risk."  P.  122  ;  May  on  Insurance,  §  218.  The  effect  of  the 
clause  plainly  is,  that  if  there  be  any  increase  of  risk,  the  plain- 
tiff cannot  recover.  It  is  in  the  nature  of  a  warranty  that 
there  shall  be  no  material  increase  of  the  risk.  Allen  v.  Mut. 
Fire  Ins  Co.,  2  Md.  Ill;  Mayor  of  New  York  v.  Hamilton 
Fire  Ins.  Co.,  10  Bosw.  537 ;  Baxendale  v.  Harvey,  4  H.  & 
N.  445.  Whether  there  is  such  a  material  increase  of  the  risk 
or  not  is  a  question  for  the  jury.  It  is  urged,  however,  that 
there  was  a  special  clause  in  the  policy  concerning  petroleum, 
and  that  this  covers  the  whole  subject,  and  thus  excludes  the 
application  of  the  "  increase  of  risk  "  clause  to  the  present  case. 
That  cla.use  provides  that  the  sale  or  storage  of  crude  or  re- 
fined coal-oil  or  petroleum,  etc.,  is  prohibited  within  the  prem- 
ises covered  by  the  policy,  except  by  written  permission  in- 
dorsed thereon.  It  is  argued,  from  this  form  of  expression, 
that  all  other  forms  of  use  except  "  sale  or  storage "  are 
allowed.  It  is  not  pretended  that  this  article  was  kept  for 
sale,  and  the  decisions  show  that  the  small  amount  of  petro- 
leum kept  in  the  present  case  for  the  purpose  indicated  is  not 
an  instance  of  "  storage."  Hynds  v.  Schenectady  Co.  Mut.  Ins. 
Co..  11  N.  Y.  554  ;  May  on  Insurance,  §  242,  and  cases  cited. 
Conceding  that  the  true  construction  of  this  condition  is  to 
aUow  the  act  of  keeping  petroleum  when  not  on  sale  or  storage, 


c.  XII.  Williams  v.  People's  Fire  Ins.  Co.  455 

it  must  still  be  harmonized  with  the  condition  concerning 
"increase  of  risk."  The  risk  must  not  be  augmented  by  any 
means  whatever  within  the  control  of  the  assured.  Takin^: 
the  clauses  together,  the  insured  could  not  fairly  claim  to  use 
petroleum  actively  and  as  an  instrument  to  accomplish  some 
purpose  of  his  own,  if  the  risk  was  thereby  increased.  A  prohi- 
bition of  "  the  sale  or  storage  of  gunpowder  "  would  not,  by 
implication,  confer  the  right  to  fire  a  pistol  among  inflammable 
substances.  Suppose  that  there  was  a  prohibition  against  the 
sale  or  storage  of  certain  chemical  substances,  not  specially 
dangerous  in  an  inert  state,  would  that  cover,  by  implication, 
the  act  of  a  chemist  who  should,  by  combining  them  into 
dangerous  and  explosive  compounds,  give  them  a  capacity  to 
cause  mischief  which  they  did  not  originally  possess  ?  This 
result  could  not  be  claimed,  even  if  there  was  an  express  insur- 
ance upon  such  substances.  Says  a  recent  author :  '•  A  per- 
mission to  keep  kerosene  or  gunpowder  for  sale,  it  is  obvious, 
cannot  fairly  be  construed  into  a  permission  to  manufacture  or 
use  them  upon  the  premises,  since  the  risks  in  the  respective 
cases  may  widely  differ."     May  on  Insurance,  §  234. 

The  plaintiff  further  insists  that  the  last-named  clause  is 
qualified  by  the  following  provision  :  "  If  the  above-mentioned 
premises  shall,  during  this  insurance,  be  occupied  or  used  so  as 
to  increase  the  risk,  or  by  the  occupation  of  neighboring  prem- 
ises, this  company,  after  notice  given  to  the  assured  or  his  or 
her  or  their  representative,  of  their  intention  to  terminate  the 
insurance,  will  refund  a  ratable  portion  of  the  premium."  It 
is  claimed  that  in  construing  this  clause,  with  the  general  one 
on  "  increase  of  risk,"  the  result  is,  that,  on  such  an  increase, 
the  company  may  terminate  the  insurance  by  notice,  and  lose 
the  unearned  premium,  or  by  withholding  notice  save  the  pre- 
mium ;  in  which  case  the  insurance  continues  binding.  This 
construction  is  inadmissible.  It  gives  no  force  to  the  general 
clause  concerning  increase  of  risk  by  the  act  of  the  insured. 
If  that  were  entirely  omitted  from  the  policy,  and  the  clause 
concerning  the  right  to  reduce  the  premium  were  inserted,  the 
company  would  have  precisely  the  same  right  which  the  plain- 
tiff insists  that  he  should  derive  from  both  the  clauses.  It 
would  necessarih'^  follow,  that,  if  the  defendant  did  not  avail 
itself  of  the  privilege  to  reduce  the  premium,  the  policy  would 


456  Insurance:   Fire,   Life,  Marine.  o.  xii. 

stand,  and  that  if  the  reduction  was  made,  the  policy  would 
cease.  On  this  construction,  no  good  reason  can  be  given  for 
two  distinct  conditions.  If  the  second  covers  any  more  acts 
than  the  first,  they  would,  naturally,  on  that  supposition,  be 
embraced  in  a  single  group  of  conditions  by  using  some  more 
general  form  of  expression.  Again,  the  proposed  construction 
leaves  the  insured  at  liberty  to  increase  the  risk  and  still  collect 
the  insurance  money,  unless  such  increase  happens  to  come  to 
the  knowledge  of  the  insurer ;  for,  in  that  case  alone  could 
notice  be  given.  The  true  construction  is  to  hold  that  the  two 
conditions  are  intended  to  meet  two  entirely  distinct  classes  of 
cases — one,  where  the  increase  of  risk  is  occasioned  by  the  act 
of  the  insured  ;  the  other,  where  it  is  caused  by  the  acts  of  third 
persons,  over  whom  the  insured  has  no  control.  In  the  former 
case  the  insurance  policy  becomes  wholly  void  ;  in  the  latter, 
the  insurer  reserves  to  himself  an  election  whether  he  will  con- 
tinue the  insurance,  or  terminate  it ;  at  the  same  time,  in  the 
last  event,  refunding  a  proportional  part  of  the  premium.  This 
view  is  taken  of  two  clauses,  nearly  identical  with  those  under 
consideration,  by  the  Supreme  Court  of  Massachusetts,  in  Allen 
V.  Massasoit  huui'ance  Company^  99  Mass.  160. 

Accordingly,  the  clause  concerning  the  increase  of  risk  by 
the  act  of  the  insured  is  a  condition  precedent,  and  if  the  risk 
has  been  increased,  the  plaintiff  cannot  recover.  It  is  imma- 
terial whether  the  loss  was  occasioned  by  the  breach  of  the 
condition.  There  can  be  no  recovery  if  the  condition  has  been 
broken,  though  the  fire  may  have  been  occasioned  by  some 
w^hoUy  independent  cause.  Flanders  on  Fire  Ins.  487,  and 
cases  cited ;  Gardiner  v.  Piscataquois  Mutual  Fire  Ins.  Co., 
38  Me.  439. 

The  only  question  that  can  be  litigated  under  the  condition 

is,  has  the  risk  been  in  fact  increased  ?     That  question  should 

have  been  submitted  to  the  jury.     As  the  judgment  should  be 

reversed  for  this  error,  it  is  unnecessary  to  consider  the  other 

points  discussed  upon  the  argument. 

All  concur. 

Judgment  reversed 


a  XII.      Kyte  v.  Commercial  Union  Assurance  Co.  457 

Supreme  Judicial  Couet  of  Massachusetts,  1889. 

KYTE  V.  COMMEKCIAL  UNION   ASSUEANCE  CO. 

(149  Mass.  114.) 

A  temporary  oreach  of  icarrantj/  vitiates  the  policy,  though  not  connected  with 
the  loss. 

Contract  upon  two  policies  of  fire  insurance  in  the  Massa- 
chusetts standard  form,  one  upon  a  dwelling-house  and  the 
other  upon  a  barn. 

The  defense  was,  that  the  policy  was  rendered  void  by  an 
increase  of  risk,  before  the  fire  occurred.  The  dwelling-house, 
which  was  in  process  of  erection  when  the  policy  upon  it  was 
issued,  contained  sixteen  rooms,  one  of  which  was  finished  and 
furnished  by  the  plaintiff  as  a  bar-room,  and  was  occupied  by 
him  as  a  hotel ;  and  the  barn  was  situated  near  it.  There  was 
evidence  tending  to  show  that  from  April,  1882,  to  July,  1883, 
the  hotel  was  used  by  the  plaintiff  for  the  illegal  sale  and 
keeping  for  sale  of  intoxicating  liquors,  such  liquors  being 
seized  on  the  premises  on  April  T,  1882,  and  duly  forfeited,  and 
the  plaintiff  being  convicted  for  the  illegal  sale  of  such  liquors 
in  April,  1883,  and.  again  in  June  of  the  same  year. 

The  defendant  offered  evidence  tending  to  show  that  there 
was  a  custom  among  fire  insurance  companies  doing  business 
in  Massachusetts,  for  many  years  past,  to  charge  a  higher  rate 
of  premium  for  insurance  on  a  building  occupied  by  a  per- 
son engaged  in  the  business  of  a  common  victualer  than  on 
a  dwelling-house ;  that  a  building  occupied  for  the  purpose  of 
carrying  on  the  business  of  a  common  victualer,  and  one  oc- 
cupied as  an  ordinary  dwelling-house,  belonged  to  different 
classes,  it  being  the  general  custom  of  insurance  companies 
doing  business  in  this  Commonwealth  to  charge  two  or  three 
times  as  much  premium  on  the  former  as  on  the  latter,  and 
that  a  much  higher  premium  would  be  charged  for  insuring  a 
building  in  which  intoxicating  liquors  were  illegally  sold  than 
on  one  of  the  same  class  in  which  they  were  not  sold. 

The  judge  gave  the  following  instructions,  among  others,  to 
the  jury : 

"  If  it  be  assumed  (and  it  may  be,  for  the  purposes  of  this 
trial)  that  such  illegal  use  would  vitiate  the  policy  and  deprive 


458  Insurance  :   Fire,  Life,  Marine.  o.  xii. 

the  plaintiff  of  the  right  to  maintain  an  action  for  a  loss  by 
fire  while  the  building  was  being  so  used,  still,  if,  upon  all  the 
evidence  in  the  case,  you  find  that  that  use  was  temporary,  not 
contemplated  at  the  time  when  the  policy  was  taken  by  the 
plaintiff,  and  that  such  illegal  use  ceased  from  and  after  the 
time  when  the  plaintiff  had  a  license  authorizing  him  to  sell 
intoxicating  liquors,  the  fact  that  he  made  an  illegal  use  of  the 
premises  in  1882  will  not  deprive  the  plaintiff  of  the  right  to 
maintain  the  action.  His  right  under  the  policy,  if  it  was 
suspended  while  the  illegal  use  of  the  building  was  being  made, 
would  revive  when  he  ceased  to  use  the  building  illegally." 

The  defendant  requested  the  judge  to  charge,  among  other 
things  : 

"  If  you  find  that,  by  the  illegal  sale  of  intoxicating  liquors 
in  this  building  by  the  plaintiff  Kyte,  or  by  others  with  his 
consent  and  knowledge,  for  a  certain  portion  of  the  time  for 
which  these  policies  were  issued,  the  risk  vras  for  that  period 
increased — this  policy  is  void  as  to  the  plaintiff  Kyte's  interest, 
and  he  cannot  recover,  although  this  increase  was  not  per- 
manent and  did  not  cause  the  fire." 

This  request  was  refused. 

The  jury  returned  a  verdict  for  the  plaintiff,  and  the 
defendant  alleged  exceptions. 

C.  Allen,  J. — These  poHcies  were  in  the  form  of  the 
Massachusetts  standard  polic}^,  and  each  provided  that,  "  This 
policy  shall  be  void  ...  if,  without  such  assent  [namely, 
the  assent  in  writing  or  in  print  of  the  company],  the  situation 
or  circumstances  affecting  the  risk  shall,  by  or  with  the  knowl- 
edge, advice,  agency,  or  consent  of  the  insured,  be  so  altered 
as  to  cause  an  increase  of  such  risks,  .  .  .  or  if  gunpowder 
or  other  articles  subject  to  legal  restriction  shall  be  kept  in 
quantities  or  manner  different  from  those  allowed  or  prescribed 
by  law."  Various  other  circumstances  were  enumerated  which 
would  also  avoid  the  policy.  At  the  beginning  of  the  trial, 
the  defendant  waived  every  defense  except  increase  of  risk. 
The  defense  of  the  illegal  keeping  of  intoxicating  liquors,  as  a 
separate  and  distinct  defense,  was  therefore  waived. 

"We  have  to  consider,  in  the  first  place,  whether  the  instruc- 
tions requested  by  the  defendant  were  given  in  substance.    The 


c.  XII.      Kyte  v.  Commercial  Union  Assurance  Co.  45d 

plaintiff  contends  that  they  were.  The  learned  judge  before 
whom  the  case  was  tried  adopted  in  substance  the  third  and 
fifth  instructions  asked  for  by  the  defendant,  and  thus  in- 
structed the  jury,  that  if  they  should  find,  that  during  the 
time  for  which  these  policies  were  issued,  the  plaintiff  Kyte,  by 
obtaining  a  common  victualer's  license  and  making  use  of  this 
building  under  said  license,  and  legally  or  illegally  selling  intox- 
icating liquors  therein,  increased  the  risk,  then  this  policy  be- 
came void  as  to  the  plaintiff  Kyte,  and  he  could  not  recover 
for  his  interest  therein ;  and  if  they  should  find,  that  while 
these  policies  were  in  force  intoxicating  liquors  Avere  kept  and 
sold  in  this  building  by  the  plaintiff  Kyte,  or  with  his  consent 
or  knowledge,  and  that  thereby  the  risk  was  increased,  this  pol- 
icy became  void  as  to  his  interest,  and  he  could  not  recover. 
This  was  a  general  and  broad  instruction,  including  the  increase 
of  risk  by  using  the  premises  as  a  common  victualing  place  or 
as  a  place  for  selling  intoxicating  liquors,  legally  or  illegally, 
and  well  covered  the  general  question  of  the  effect  of  an  in- 
crease of  risk.  From  this  instruction,  taken  alone,  a  jury  might 
well  have  inferred  that  the  policy  would  be  void  in  case  of  any 
such  increase  of  risk  at  any  time  during  the  time  covered  by 
the  policies  and  before  the  fire. 

But  the  defendant,  in  the  fourth  request  for  instructions, 
asked  for  a  special  instruction,  adapted  to  the  case  of  a  tempo- 
rary increase  of  risk  which  had  ceased  before  the  time  of  the 
fire ;  that  is  to  say,  that  if  the  jury  should  find  that,  by  the 
illegal  sale  of  intoxicating  liquors  in  this  building  by  the  plain- 
tiff Kyte,  or  by  others  w^ith  his  consent  and  knowledge,  for  a 
certain  portion  of  the  time  for  which  these  policies  were  issued, 
the  risk  was  for  that  period  increased,  this  policy  would  be  void 
as  to  Kyte's  interest,  and  he  could  not  recover,  although  this 
increase  was  not  permanent.  The  judge  declined  to  give  this 
ruling,  and  instructed  the  jury,  in  substance,  that,  if  that  illegal 
use  was  temporary,  not  contemplated  at  the  time  when  the  pol- 
icy was  taken  by  the  plaintiff,  and  ceased  before  the  fire,  then 
the  fact  that  he  had  made  an  illegal  use  of  the  premises  in 
1882,  which  was  during  the  time  covered  by  the  policy,  would 
not  deprive  the  plaintiff  of  the  right  to  maintain  the  action ; 
and  that  his  right  under  the  policy,  if  suspended  while  the  ille- 
gal use  of  tlie  building  continued,  would  revive  when  he  ceased 


460  Insurance:    Fire,  Life,  Marine.  o.  xii. 

to  use  it  illegally.  This  instruction  did  not  in  express  terms 
mention  the  subject  of  an  increase  of  risk  by  the  illegal  use  of 
the  premises  for  selling  liquor ;  but  the  instruction  was  given  in 
place  of  the  fourth  request  for  instructions,  and  that  request 
was  refused,  the  judge  saying  that  he  had  given  what  would 
be  entirely  inconsistent  with  it. 

The  question  is  thus  presented,  whether  the  provision  of  the 
policy  that  it  shall  be  void  in  case  of  an  increase  of  risk  means 
that  it  shall  be  void  only  during  the  time  while  the  increase  of 
risk  may  last,  and  may  revive  again  upon  the  termination  of 
the  increase  of  risk.  The  provision  is,  that  the  policy  shall  be 
void  if  any  one  of  several  circumstances  successively  enumer- 
ated shall  be  found  to  exist.  Some  of  these  circumstances 
relate  to  the  time  of  issuing  the  policy,  and  others  could  not 
arise  till  afterwards.  They  are  of  different  degrees  of  impor- 
tance, some  of  them  going  to  the  essential  matters  of  the 
contract,  and  others  being  comparatively  trivial  in  character. 
The  language  of  the  policy  is  the  same  in  respect  to  them  all. 
that  the  policy  shall  be  void. 

In  ITincMey  v.  Germania  Ins.  Co.,  140  Mass.  38,  the  policy 
was  in  the  same  form  as  those  in  the  present  cases,  and  for  a 
short  time  during  the  term  of  the  policy  the  plaintiff  kept 
a  bowling  alley  and  billiard  table  without  having  any  license 
therefor.  There  was  no  question  of  increase  of  risk,  or  other 
actual  prejudice  to  the  insurer;  and  under  these  circumstances 
two  questions  arose :  First,  whether  the  plaintiff's  act  fell 
within  the  provision  that  the  policy  should  be  void  if  gun- 
powder or  other  articles  subject  to  legal  restriction  should  be 
kept  in  a  manner  different  from  that  allowed  by  law ;  and, 
secondly,  whether,  assuming  that  the  policy  would  be  void 
during  the  time  of  the  illegal  keeping  of  the  bowling  alley  and 
billiard  table,  it  would  revive  after  such  temporary  use  had 
ceased.  In  deciding  the  case,  the  court  intimated  that  the 
plaintiff's  act  was  not  within  the  meaning  of  the  provision  in 
the  policy,  unless  the  risk  was  thereby  increased,  but  placed 
the  decision  upon  the  second  ground,  that  the  policy  would 
revive.  The  court  now  thinks  it  would  have  been  better  to 
place  the  decision  of  this  part  of  the  case  solely  upon  the  first 
ground,  leaving  it  an  open  question  whether  a  departure  from 
the  terms  of  the  provision  of  the  policy,  without  an  increase  of 


0.  XII.       Kyte  v.  Commercial  Union  Assurance  Co.  461 

risk,  may  be  deemed  merely  to  suspend,  and  not  absolutely  to 
avoid  the  policy.  However  that  may  be,  we  think  an  increase 
of  risk  entitles  the  insurer  to  avoid  the  policy  absolutely.  The 
contract  of  insurance  depends  essentially  upon  an  adjustment 
of  the  premium  to  the  risk  assumed.  If  the  assured,  by  his 
voluntary  act,  increases  the  risk,  and  the  fact  is  not  known, 
the  result  is  that  he  gets  an  insurance  for  which  he  has  not 
paid.  In  its  effect  upon  the  company,  it  is  not  much  different 
from  a  misrepresentation  of  the  condition  of  the  property. 

If  the  provision  stood  alone,  that  in  case  of  any  material 
misrepresentation  as  to  the  risk  or  any  voluntary  increase  of 
risk  afterwards  the  policy  should  be  void,  it  could  hardly  be 
doubted  that  the  words  should  be  taken  in  their  natural, 
obvious  meaning.  The  fact  that  with  this  are  coupled  the 
other  provisions  above  referred  to  does  not  change  its  meaning 
with  reference  to  the  effect  and  consequence  of  an  increase  of 
risk.  An  increase  of  risk  which  is  substantial,  and  which  is 
continued  for  a  considerable  period  of  time,  is  a  direct  and  cer- 
tain injury  to  the  insurer,  and  changes  the  basis  upon  which 
the  contract  of  insurance  rests ;  and  since  there  is  a  provision 
that,  in  case  of  an  increase  of  risk  which  is  consented  to  or 
known  by  the  assured,  and  not  disclosed  and  the  assent  of  the 
insurer  obtained,  the  policy  shall  be  void,  we  do  not  feel  at 
liberty  to  qualify  the  meaning  of  these  words  by  holding  that 
the  polic}'^  is  only  suspended  during  the  continuance  of  such 
increase  of  risk.  Lyman  v.  State  Ins.  Co.^  14  Allen,  329. 
Mead  v.  Northwestern  Ins.  Co.,  7  N.  Y.  530. 

It  follows,  therefore,  that  the  fourth  instruction  which  was 
requested,  or  something  in  substance  like  it,  should  have  been 
given.  Upon  the  facts  stated  and  assumed,  the  increase  of 
risk,  if  there  was  one,  continued  for  fifteen  months,  and  could 
not  be  treated  as  a  casual,  inadvertent,  or  inevitable  thing. 

Exceptions  sustained' 


CHAPTER   XIII. 

cflauses  of  the  new  york  standard  fire  policy — oontinired. 

New  York  Court  of  Appeals,  1889. 
WALTON  AND   WIFE   v.   AGRICULTURAL  INS.  CO. 

(116  N.  Y.  326.) 
Alienation  clause.    Change  ofinterett.    Shifting  of  interest  among  the  insured. 

This  action  was  brought  upon  a  policy  of  insurance  issued 
by  the  defendant,  to  recover  the  sum  of  $500  for  loss  sustained 
by  the  burning  of  a  barn,  a  quantity  of  hay  and  grain,  and  two 
horses,  covered  by  the  policy. 

Said  policy  contained  the  following  condition  :  "  If  the  said 
property  be  sold  or  conveyed,  or  if  the  interest  of  the  parties 
therein  be  changed  in  any  manner,  whether  by  the  act  of  the 
parties  or  by  operation  of  law,  .  .  .  then,  and  in  every 
such  case  and  in  either  of  said  events,  this  policy  shall  be  null 
and  void,  until  the  written  consent  of  the  company  at  the  home 
office  is  obtained." 

At  the  time  of  the  application  for,  and  issuance  of  the  policy, 
William  T.  Walton  was  the  owner  of  the  premises  insured. 
About  five  months  thereafter  he  conveyed  said  property  to  a 
third  person,  who,  on  the  same  day,  duly  conveyed  the  same  to 
Eliza  D.  Walton,  the  wife  of  William.  Notice  of  these  trans- 
fers was  never  given  to  the  defendant,  neither  was  the  written 
consent  of  the  company  at  the  home  office  obtained.  William 
T.  Walton,  against  the  objection  of  the  defendant,  testified  that 
he  told  the  agent,  at  the  time  the  apphcation  for  insurance  was 
made,  that  as  soon  as  he  had  finished  repairing  the  buildings  he 
should  convey  the  property  to  his  wife,  and  that  he  wanted  a 
policy  so  made  out  as  to  cover  his  interest  now  and  the  interest 
of  his  wife  after  conveyance  made.     The  agent  replied  that  he 


a  iiii.    Walton  and  Wife  v.  Agkioultural  Ins.  Co.        463 

could  accomplish  that  result  by  making  the  policy  out  to  William 
T.  Walton  and  wife.  It  was  thereupon  arranged  that  such  a 
policy  should  be  applied  for,  and  he  signed  an  application  to  the 
company. 

The  agent  or  solicitor  who  made  out  the  application  was 
not  a  general  agent,  and  did  not  have  authority  to  issue  policies. 
His  duty  was  to  make  out  applications  for  insurance  and  for- 
ward them  to  the  home  office  of  the  company,  where  they  were 
passed  upon.  If  rejected,  the  matter  was  at  an  end ;  if  ac- 
cepted, a  policy  of  insurance  was  made  out  and  forwarded  to 
the  agent  for  delivery  on  receipt  of  premium.  Respecting  the 
extent  and  limitation  of  the  authority  of  the  agent  to  represent 
the  defendant,  the  policy  in  question  provided  as  follows : 
*'  Agents  of  the  company  are  permitted  to  give  the  consent  of 
the  company  to  assignment  of  policies.  But  no  agent  of  the 
company  is  permitted  to  give  consent  of  the  company  in  any 
other  cases  required  by  the  provisions  of  this  policy,  or  to  waive 
any  stipulation  or  condition  contained  herein  ;  but  in  all  cases 
where  the  consent  of  the  company  is  required  by  this  policy, 
other  than  consent  to  the  assignment  of  the  policy,  such  con- 
sent must  be  obtained  at  the  home  office  of  the  company." 

The  trial  court  charged  the  jur}^,  as  a  matter  of  law,  that 
the  conveyance  from  husband  to  wife  through  a  third  person 
did  not  vitiate  the  policy,  and  that  the  plaintiffs  were  entitled 
to  recover.     Defendant  excepted.     Yerdict  for  plaintiffs. 

Parker,  J. — The  contract  of  insurance  upon  which  the  plain- 
tiffs base  their  right  to  recover  in  this  action,  provided  that  if 
the  property  insured  be  sold  or  conveyed,  or  if  the  interest  of 
the  parties  be  changed  in  any  manner,  the  policy  shall  be  null 
and  void,  until  the  written  conbent  of  the  company  at  the  home 
office  shall  be  obtained. 

Subsequent  to  the  issuance  of  the  policy  the  property  was 
conveyed  by  Walton,  through  a  third  person,  to  his  wife  with- 
out the  written  consent  of  the  company.  Thus,  by  the  terms 
of  the  contract,  the  policy  of  insurance  became  of  no  effect. 
Opon  the  trial  the  plaintiffs  sought  to  relieve  themselves  from 
the  effect  of  the  violated  condition  by  the  introduction  of  oral 
evidence  tending  to  show  that  Walton  informed  the  defendant's 
solicitor  of  his  intention  to  convey  to  his  wife  after  a  few 


464  Insurance  :   Fire,  Life,  Marine.  o.  xiii 

months,  and  requested  that  the  policy  be  so  drawn  as  to  covei 
his  interest  before  conveyance  and  that  of  his  wife  afterwards, 
and  that  the  sohcitor  informed  him  that  he  could  accomplish 
that  result  by  issuing  the  policy  to  William  T.  Walton  and 
wife.  The  evidence  upon  that  subject  was  seasonably  objected 
to  by  the  defendant,  but  was  received  by  the  court ;  and  the 
jury,  in  a  special  finding,  found  the  fact  to  be  as  contended  for 
by  the  plaintiffs. 

The  question  presented,  therefore,  is,  can  the  plaintiffs  be 
permitted  to  show,  in  contradiction  of  the  express  terms  of  the 
contract,  that  it  was  orally  agreed  before  its  making  and 
delivery  that  they  should  be  permitted  thereafter  to  do  an  act 
which  the  contract  forbids  ? 

This  is  not  an  action  brought  to  so  reform  a  contract  as  that 
it  shall  be  made  to  voice  the  agreement  which  the  parties 
intended  to  make.  On  the  contrary,  it  is  based  on  the  policy 
as  it  was  written,  and  cannot  be  maintained  by  evidence  that 
the  contract  was  intended  to  be  a  different  one.  For  a  policy 
of  insurance  is  presumed  to  embrace  the  entire  agreement  of 
the  parties.  The  precedent  oral  agreement  cannot  be  regarded 
as  a  part  of  the  policy  or  in  any  wise  effective  as  a  contract. 
Like  other  written  contracts,  the  oral  agreement,  preceding  its 
execution  and  delivery,  is  presumed  to  have  become  merged  in 
it,  and  its  terms  cannot  be  controlled  or  varied  by  parol 
evidence.  Pindar  v.  Resolute  Fire  Ins.  Co..,  47  K.  T.  114 ; 
Ripley  V.  JEtna  Ins.  Co..,  30  id.  136  ;  Alston  v.  Mechanics^ 
Mutual  Ins.  Co.,  4  Hill,  329. 

The  cases  of  Yan  Schoick  v.  Niagara  Insurance  Com- 
pany, 68  N.  r.  434  ;  Woodruff  v.  Imperial  Insurance  Coryipany^ 
83  id.  135,  and  Short  v.  Home  Insurance  Company,  90  id.  16, 
are  not  in  conflict  with  this  rule.  True,  oral  evidence  was 
received  in  each  of  those  cases.  It  was  not  received,  however, 
for  the  purpose  of  contradicting  the  written  agreement,  or  to 
show  that  the  parties  made  a  different  contract  than  the  one 
expressed,  but  to  demonstrate  that  the  insurer,  at  the  time  of 
the  issuance  of  the  policy,  had  knowledge  of  the  facts,  the 
existence  of  which  were  asserted  upon  the  trial,  to  constitute 
a  breach  of  warranty.  Upon  such  proof  was  predicated  an 
estoppel  against  the  insurer.  It  was  held,  in  effect,  that  if  the 
insurer  receive  pay  for  a  policy  of  insurance,  knowing  it  to  be 


c.  XIII.    Walton  and  Wife  v.  Agricultural  Ins.  Co.         465 

invalid  when  issued,  he  shall  be  deemed  to  be  estopped  from 
insisting  upon  its  invalidity.  The  object  of  this  rule  is  to  pre- 
vent fraud  and  to  render  it  impracticable  for  insurers  to  attempt 
the  acquisition  of  premiums  upon  policies  known  to  be  invalid 
when  issued.  The  principle  of  those  cases  cannot  be  apphed 
here.  The  act  which  the  contract  declares  shall  vitiate  the 
policy  had  not  been  performed  when  the  policy  was  issued. 
It  was  not  an  existing  fact.  The  policy  was,  therefore, 
valid  at  the  time  of  its  issuance,  and  so  remained  until  the 
propert}^  was  conveyed  without  the  consent  of  the  defendant. 
Certainly,  the  facts  here  disclosed  fail  to  suggest  a  fraud  which 
will  estop  the  defendant  from  interposing  as  a  defense  the 
warranty  against  a  conveyance  of  the  property.  As  the 
defendant  is  not  estopped  and  the  action  is  brought  upon  the 
contract  as  it  was  written,  it  follows  that  the  admission  of 
parol  testimony  to  vary  or  contradict  one  of  its  provisions  was 
error. 

The  judgment  should  be  reversed  and  a  new  trial  granted, 
costs  to  abide  the  event. 

Bradley,  J.  (dissenting). — The  main  question  is  whether 
there  was  a  breach  of  the  provision  of  the  policy  that  "  if  the 
said  property  shall  be  sold  or  conveyed,  or  if  the  interest  of 
the  parties  therein  be  changed  in  any  manner,  whether  by  act 
of  the  parties  or  by  operation  of  law  .  .  .  this  policv 
shall  be  null  and  void  until  the  written  consent  of  the  company, 
at  the  home  office,  is  obtained,"  and,  if  so,  whether  such  breach 
is  available  to  the  defendant  as  a  defense.  When  the  policy 
was  made  and  the  property  by  it  insured,  the  title  to  the 
property  was  in  the  plaintiff,  William  T.  Walton,  and  after- 
wards, before  the  loss,  it  was  conveyed  by  him,  through  a  third 
party,  to  his  wife  the  plaintiff,  Eliza  D.  Walton,  who  had  the 
title  at  the  time  of  such  loss.  The  policy  was  made  to  both 
of  the  plaintiffs,  and  by  it  the  defendant  undertook  to  make 
good  to  the  insured,  their  heirs,  executors,  and  administrators, 
such  loss  or  damage,  not  exceeding  in  amount  the  sum  insured, 
as  should  happen  by  fire  to  the  property  during  the  term  of 
the  insurance.  This  contract  was  made  by  the  defendant  to 
plaintiffs  jointly,  apparently  for  the  ])urp()se  of  indemnifying 
both  of  them  against  loss  or  damage  as  to  all  the  property,  as 
80 


4(j6  Insurance  :    Fire,  Life,  Marine.  o.  xiii, 

if  they  had  a  united  interest  in  it.  The  inquiry  arises,  Why 
was  this  done  so  by  the  defendant  ?  If  the  company  vv«re 
not  advised  that  the  title  was  wholly  in  the  husband  at  the 
time  the  contract  was  made,  it  might  be  said  that  the  policy 
was  made  in  that  form  because  it  was  called  for  by  the  appli- 
cation of  the  plaintiffs.  But  that  question  is  answered  by 
evidence,  on  the  part  of  the  plaintiffs,  to  the  effect  that  when 
the  defendant's  agent  called  upon  the  husband  to  obtain  the 
insurance,  he  was  advised  by  him  that  he  then  had  the  title 
and  intended  to  convey  the  property  to  his  wife,  and  wanted 
the  policy  so  that  it  would  insure  the  property  while  he  held 
it  and  have  the  like  effect  after  the  conveyance  to  her,  and 
was  informed  by  the  agent  that  it  could  be  done  by  a  policy 
to  both  of  them.  It  was  then  understood  that  it  should  be  so 
made  for  that  purpose,  and  an  application  was  prepared  by  the 
agent  accordingly.  And  when  the  agent  delivered  the  policy, 
he  assured  the  husband  that  such  was  its  effect.  Upon  that 
subject  the  jury  specially  found  that  there  was  an  understand- 
ing between  the  agent  and  Mr.  "Walton,  at  the  time  the  appli- 
cation was  made,  that  the  premises  would  be  transferred  by  the 
latter  to  his  wife  thereafter,  and  that  the  policy  was  issued  to 
Walton  and  his  wife,  on  that  account,  by  the  defendant.  The 
powers  of  the  agent  were  somewhat  defined  by  his  certificate  of 
appointment,  which  was  that  he  was  constituted  agent,  "  with  full 
power  to  receive  proposals  of  insurance,  ...  to  consent  to 
assignments  of  policies  and  to  attend  to  the  business  of  said 
agency,  in  accordance  with  the  rules  and  regulations  of  said  com- 
pany, and  to  such  instructions  as  may  be  given  by  its  officers." 
He  was  not,  therefore,  a  general  agent  of  the  defendant,  and  had 
not  the  power  to  waive  the  condition  of  the  policy  first  above 
mentioned.  Wilson  v.  Genesee  Mid.  Ins.  Co.,  14  N.  Y.  418. 
But  the  defendant  was  responsible  for  the  acts  of  the  agent 
within  the  scope  of  his  authority,  and  chargeable  with  the 
knowledge  he  acquired  in  the  exercise  of  his  power,  having 
relation  to  it,  and  upon  which  he  acted,  and  the  parties  insured 
relied  in  their  dealing  with  him.  The  matter  of  title  to  the 
property,  at  the  time  the  application  and  policy  were  made, 
was  a  legitimate  fact  of  inquiry  and  representation.  The 
policy  provides  that  applications  for  insurance  must  be  made 
'<n  writing  and  signed  by  the  applicant,  or  by  his  authority, 


o.  XIII.    Walton  and  Wife  v.  Agkicultubal  Ins.  Co.        467 

and  that  all  its  statements  will  be  deemed  warranties ;  and  if 
the  interests  of  the  insured  be  any  other  than  the  entire,  un- 
conditional, and  sole  ownership  of  the  property  for  the  use  and 
benefit  of  the  insured,  it  must  be  so  represented  to  the  com- 
pany in  the  application,  otherwise  the  policy  will  be  void. 
And  any  misrepresentation  or  concealment  will  have  the  like 
effect.  It  may  be  assumed,  so  far  as  it  is  essential  to  do  so, 
that  the  defendant  was  charged  with  knowledge  of  any  in- 
formation received  by  the  agent  on  the  occasion  of  taking  the_ 
application,  in  respect  to  the  title  to  the  property  insured. 
McEwen  V.  Montgomery^  etc.^  Ins.  Co.^  5  Hill,  101 ;  Van 
Schoick  V.  Niagara  F.  his.  Co.,  68  N.  Y.  434.  The  company 
then,  with  knowledge  that  the  wnfe  had  no  title  to  the  prop- 
erty, united  her  with  her  husband  as  a  party,  insured  by  the 
policy,  for  the  purpose  of  indemnifying  her  against  such  loss 
as  she  might  suffer  at  the  time  and  in  the  event  it  should 
occur.  That  interest  was  dependent  upon  transfer  of  the 
property  or  some  interest  in  it  to  her  by  her  husband.  There 
was  no  apparent  reason  for  making  the  wife  a  party  to  the 
policy,  other  than  that  she  might  subsequently  acquire  some 
interest  in  the  property.  It  would,  therefore,  seem  that  the 
taking  by  the  wife  of  the  title  or  some  interest  in  it,  from  her 
husband,  may  be  deemed  to  have  been  in  contemplation  between 
the  parties  to  the  contract  of  insurance  when  the  policy  was 
issued,  and  that  the  defendant  may  be  estopped  from  asserting 
to  the  contrary.  It  cannot  well  be  claimed  that  the  wife  was 
joined  with  a  view  to  her  inchoate  right  of  dower  in  the  real 
property  covered  by  the  })olicy.  It  is  only  the  entire,  uncon- 
ditional, and  sole  ownership  that  is  insured,  unless  otherwise 
represented  in  the  application.  The  title  of  the  property  or 
interest  in  it,  of  any  party  insured,  is  in  no  manner  qualified 
in  the  application  or  policy.  In  view  of  the  situation,  as  above 
represented,  there  arises  the  further  question,  Was  the  property 
sold  or  conveyed,  or  the  interest  therein  of  the  parties  insured 
in  any  manner  changed  within  the  meaning  of  the  provisions 
of  the  policy  %  The  title  had  not  passed  from  those  parties  at 
the  time  of  the  loss.  The  conveyance  through  a  third  party 
to  the  wife  had  the  effect  only  to  take  the  title  beyond  them 
on  its  way  to  her,  and  in  practical  effect  is  no  different  than 
if  it  could  have  and  had  been  made  directly  from  the  hus- 


468  Insurance  :    Firk.  Ltp^k,   Marine.  c,  xiii. 

band  to  the  wife.  Wolfe  v.  Security  Fire  Ins.  Co.,  39  N.  Y. 
49.  If  they  had  held  the  title  jointly  when  the  policy 
was  made,  transfers  thereafter  made  between  them  would 
seem  not  to  come  within  the  condition  of  the  policy  relat- 
ing to  the  sale  or  conveyance  of  the  property  insured  or  to 
the  change  of  the  interest  of  the  parties  in  it.  Such  is  the 
weight  of  authority  upon  that  subject.  Hoffman  v,  JEtna 
Fire  Ins.  Co.,  32  N".  Y.  405  ;  Keeney  v.  Home  Ins.  Co.,  71  id 
402;  Dresser  v.  U.  F.  Ins.  Co.,  45  Hun,  298;  Burnett  v 
Fufala  Home  Ins.  Co.,  46  Ala.  11;  7  Am.  E.  581;  Pierce 
V.  Nashua  Ins.  Co.,  50  N".  H.  297  ;  9  Am.  R.  235  ;  Dermani 
V.  Home  Mut.  Ins.  Co.,  26  La.  Ann.  69;  21  Am.  R.  544 
West  V.  Citizen's  Ins.  Co.,  27  Ohio  St.  1 ;  22  Am.  R.  294 
Texas  Banking  and  Ins.  Co.  x.  Cohen,  47  Tex.  406  ;  26  Am.  R 
298  ;  Poioers  v.  Guardian  Fire  Ins.  Co.,  136  Mass.  108;  49  Am 
R.  20  ;  Pech  v.  New  london  Mut.  Ins.  Co.,  22  Conn.  575  ;  Loch- 
wood  V.  Middlesex  Mut.  As.  Co.,  47  id.  553.  And  a  reason  for 
such  construction,  as  given  by  Judge  Porter  in  the  Hoffman 
case,  and  adopted  in  some  of  the  other  cases  cited,  was  that  the 
sales  and  conveyances  which  the  parties  had  in  view  when  the 
condition  was  made  part  of  the  contract,  were  "  evidently  such, 
and  such  only,  as  vv^ould  transfer  the.  proprietary  interest  of 
those  with  whom  the  insurers  contracted  to  others  with  whom 
they  had  not  consented  to  contract.  They  testified  their  confi- 
dence in  each  of  the  assured  by  issuing  to  them  the  policy,  but 
they  did  not  choose  to  repose  blind  confidence  in  others  who 
might  succeed  to  the  ownership.  .  .  .  The  design  of  the  pro- 
vision was  to  interdict  all  sales  of  proprietary  interests  by  parties 
insured  to  parties  not  insured."  In  the  present  case  both  plain- 
tiffs were  parties  to  the  contract,  and  both  were  insured  by  it. 
The  wife,  no  less  than  the  husband,  was  by  the  terms  of  the 
policy  insured.  The  title  and  entire  interest  in  the  property 
remained  in  the  parties  whom  the  defendant  undertook  by  the 
contract  to  indemnify.  The  reason  of  the  rule  of  construction 
applied  in  the  Hoffman  case  is  applicable  to  this  case.  The 
confidence  reposed  in  the  plaintiffs  must  be  deemed  to  have 
been  equal  as  to  each,  because  the  contract  was  made  alike 
with  both  of  them.  Such  contracts  are  of  a  personal  nature, 
and  in  making  them  are  involved  considerations  having  relation 
to  the  character  of  the  persons  insured,  as  upon  their  care  and 


o.  XIII.    Walton  and  Wife  v.  Agricultural  Ins.  Co.         469 

vigilance  the  reasonable  protection  of  the  property  against  the 
hazard  assumed  by  the  insurer  is  dependent.  Hence  it  is  that 
such  conditions  are  inserted  in  policies,  so  that  the  insurers 
may  not  be  subjected  to  consequences  of  the  habits  or  motives 
of  interest  of  those  with  whom  no  contract  of  insurance  has 
been  made.  The  purpose  of  a  provision  in  a  contract  may  be 
entitled  to  some  considerations  in  its  construction  and  applica- 
tion, with  a  view  to  the  intention  of  the  parties,  and  tliat  such 
intention  may  be  carried  into  effect.  Kelley  v.  JJjpton^  5  Duer, 
336 ;  Parshall  v.  Eggert,  54  N.  Y.  18  ;  Colt  v.  Phmnix  Ins. 
Co.,  id.  595.  And  as  was  said  in  Hoffman  v,  JEtna  Insurance 
Company,  32  N.  Y.  413  :  "  Words  should  not  be  taken  in  their 
broadest  import  when  they  are  equally  appropriate  in  a  sense 
limited  to  the  object  the  parties  had  in  view."  In  such  case 
the  language  employed  will  be  construed  contra  proferentem, 
and  will  be  given  such  import  as  the  promisor  had  reason  to 
suppose  the  other  party  understood  it,  Mc Master  v.  Insurance 
Co.,  55  N.  Y.  222 ;  White  v.  Hoyt,  73  id.  505.  It  is  only  when 
no  other  construction  is  permitted  that  such  one  as  produces 
a  forfeiture  or  renders  a  contract  void  will  be  adopted.  Ritch- 
cock  V.  W.  W.  lis.  Co.,  26  N.  Y.  68 ;  Dilleber  v.  Insurance  Co., 
69  id.  256 ;  Coyne  v.  Weaver,  84  id.  386.  The  promise  of  the 
defendant  was  to  make  good  the  loss  or  damage  to  the  prop- 
erty which  the  plaintiffs  should- sustain.  This  was  subject  to 
the  condition  that  the  property  should  not  be  sold  or  conveyed, 
or  the  interest  therein  of  the  plaintiffs  changed.  The  title  did 
not,  nor  did  any  interest  in  it,  pass  from  the  parties  insured. 
It  was  wholly  in  those  parties  when  the  policy  was  made,  and 
was  still  there  at  the  time  of  the  loss.  In  that  sense  there  was 
no  sale  or  change  of  interest,  and  in  that  sense  the  language  of 
the  condition  may  be  interpreted,  and  thus  the  supposed  inten- 
tion of  the  parties  to  the  contract  effectuated.  They  are,  by 
the  terras  of  the  policy,  treated  as  one  party  to  it  without  any 
distinction  as  to  interest  or  as  to  the  beneficial  results  which 
might  come  from  the  promised  indemnity.  This  leads  to  a 
further  proposition,  that  the  defendant,  chargeable  with  knowL 
edge  of  the  situation  of  the  title  to  the  property  at  the  time 
the  policy  was  made,  treated  the  plaintiffs  as  interested  jointly 
in  it ;  and,  if  that  relation  were  essential  to  the  right  of  transfer 
between   themselves   without   breach  of  the  condition  before 


4:70  Insurance  ;    Fire,  Life,  Marine.  o.  uii. 

mentioned,  the  defendant  is  disabled,  for  the  purpose  of  defense, 
from  denying  to  them  the  benefit  which  such  relation  would 
afford.  Otherwise,  it  may  be  said  that  the  defendant  had  fur- 
nished an  opportunity  to  itself  to  practice  a  fraud  upon  them, 
which  could  not  have  existed  if  the  policy  had  been  made  to 
the  husband  alone  ;  for  in  that  case,  on  the  sale  and  conveyance 
to  the  wife,  she  could  have  taken  the  consent  of  the  company 
to  the  transfer  and  continued  the  policy  for  her  benefit,  or  have 
obtained  insurance  elsewhere.  Short  v.  Home  Ins.  Co..,  90  N. 
Y.  16.  The  fact  that  she  was  made  a  party  to  it,  under  the 
circumstances  which  placed  her  in  that  relation,  rendered  the 
consent,  which  the  agent  was  authorized  to  give,  of  transfer  of 
the  policy  unnecessary,  and  she  was  at  liberty  to  assume  that 
it  was  effectual  for  her  indemnity. 

FoLLETT,  Ch.  J.,  Potter  and  Yann,  JJ.,  concur  with 
Parker,  J. ;  ELaight  and  Brown,  JJ.,  concur  with  Bradley, 
J.,  dissenting. 

Judgment  reversed. 


CHAPTER  XrV. 

CLAUSES  OF  THB   NBW  YOBK  STAKDABD   FIBB  POUOT — OOSTDrUSDl 

New  Yoek  Coubt  of  Appeals,  1890. 
SMITH  V.  AGRICULTURAL  INS.  00. 

(118  N.  Y.  623.) 
Warranty  against  incumhranoe$. 

FoLLETT,  Ch.  J. — This  action  was  defended  on  the  ground, 
among  others,  that  the  following  conditions  in  the  policy  were 
violated  by  the  insured  : 

(1)  "  If  the  property,  either  real  or  personal,  or  any  part 
thereof,  shall  be  encumbered  by  mortgage,  judgment  or  other- 
wise, it  must  be  so  represented  to  the  company  in  the  applica- 
tion, otherwise  this  entire  policy  and  every  part  thereof  shall 
be  void." 

(2)  "  This  policy  of  insurance  is  based  upon  a  written  appli* 
cation  on  file  in  the  company's  office,  purporting  to  be  signed 
by  the  applicant,  or  by  his  authority,  and  all  statements  con- 
tained therein  are  warranties  on  the  part  of  the  assured." 

The  application  on  which  the  policy  was  issued  was  signed 
by  the  duly  authorized  agent  of  the  insured,  and  contains  this 
question  and  answer : 

"  Q.  How  much  is  the  real  estate  encumbered?   A.  $1,000.'* 

When  the  policy  was  issued,  and  when  the  loss  occurred, 
there  were  five  mortgages  on  the  fifty  acres,  the  principal 
sums  of  which  aggregated  $4,411.14,  with  arrears  of  interest 
amounting  to  more  than  $600,  so  that  the  premises  were 
encumbered  for  upward  of  $5,000 ;  and,  in  addition,  there  was 
mortgage  upon  six  acres,  adjoining  the  fifty  acres,  of  $500, 
"with  interest  from  July  1,  1887. 

Since  1880,  Elton  M.  Smith,  the  insured,  has  not  resided  in 


4T2  Insurance  :    Fike,  Life,  Makine.  c,  xiv. 

this  State,  and  Elijah  Smith,  his  father,  has  occupied  the  prop- 
erty, and  acted  as  the  agent  of  his  son  in  respect  to  this  insur- 
ance. Since  some  time  before  the  date  of  the  policy,  Abram 
Weed  has  been  an  agent  of  the  defendant,  with  powers 
defined  by  the  following  clause  in  the  application :  "  The 
powers  of  the  agents  of  this  company  are  limited  to  receiving 
proposals  for  insurance  and  collecting  premiums,  and  giving 
the  assent  of  the  company  to  assignments  of  policies."  The 
oral  negotiations,  which  resulted  in  the  execution  and  deliv- 
ery  of  the  application  on  which  the  policy  was  issued,  were 
conducted  by  Elijah  Smith  in  behalf  of  the  insured,  and 
Abram  Weed  in  behalf  of  the  defendant.  Elijah  Smith  testi- 
fied :  "  Q.  What  was  said  (between  you  and  Weed)  on  the 
subject  of  incumbrances  ?  A.  He  asked  if  there  was  a  $1,000 
incumbrance,  and  I  told  him  there  was  over  $2,000  incum- 
brance on  it.  Q.  Did  you  tell  him  there  was  $1,000  incum- 
brance on  it?  A.  No,  sir  ;  the  application  was  not  read  to  me, 
and  I  did  not  read  it ;  that  representation  that  there  was  only 
$1,000  incumbrance  was  not  true  ;  I  signed  it  not  knowing 
that  that  was  there." 

Abram  Weed  testified  that  Elijah  Smith  stated  that  the 
place  was  encumbered  for  $1,000,  and  that  he  did  not  say  it 
was  encumbered  for  over  $2,000. 

The  court  instructed  the  jury,  that,  if  Elijah  Smith  stated  to 
Abram  Weed  that  the  place  was  encumbered  for  $1,000,  the 
plaintiff  could  not  recover.  But  if  Smith  told  Weed  the  place 
was  encumbered  for  over  $2,000,  that  the  discrepancy  between 
such  statement  and  the  amount  of  the  incumbrances  was  not 
a  defense  to  the  action.  To  this  instruction  the  defendant  ex- 
cepted, and  asked  the  court  to  instruct  the  jury,  that,  if  they 
found  that  Smith  stated  to  Weed  that  the  property  was  encum- 
bered for  over  $2,000,  the  plaintiff  could  not  recover,  which 
was  refused,  and  an  exception  taken.  This  question  was  also 
raised  by  a  motion  to  non-suit. 

The  most  favorable  view  which  can  be  taken  by  the  court 
for  the  plaintiff  is  to  consider  the  case  as  though  the  question 
and  answer  testified  to  by  Smith  had  been  inserted  in  the 
application  instead  of  in  the  question  and  answer  appearing 
therein. 

Assuming,  then,  that  the  conversation  between  the  agents 


0.  XIV.  Smith  v.  Agkicultural  Ins.  Co.  473 

of  the  contracting  parties  about  incumbrances  was  precisely 
as  testified  to  by  the  insured's  agent,  tliere  was  a  material  mis- 
representation in  respect  to  tlie  amount  of  the  liens.  The 
answer  that  the  place  was  incumbranced  "  for  over  $2,000,"  to 
the  question,  "  Is  there  a  $1,000  incumbrance  on  it?  "  did  not 
actually  or  proximately  disclose  the  fact  inquired  about.  The 
answer,  "  over  $2,000,"  cannot  by  any  fair  construction  be 
held  to  be  notice  to  the  defendant,  or  its  agent,  that  the  place 
was  then  encumbered  for  over  $5,000. 

It  is  urged  by  the  respondent  that  this  contract  of  insur- 
ance is  severable ;  that  the  insurance  on  the  barn  should  be 
deemed  one  contract,  the  insurance  on  its  contents  another 
contract ;  and  that  a  misstatement  in  respect  to  the  amount 
for  which  the  realty  was  encumbered  does  not  invalidate  the 
insurance  on  the  personalty ;  and  that  defendant,  having 
asked  the  court  to  rule  that  no  part  of  the  loss  could  be  re- 
covered,  asked  for  too  much  in  the  instruction  prayed  for  and 
in  its  motion  for  a  non-suit,  and  that  the  exceptions  to  these 
rulings  are  unavailable.  Under  forms  of  policies  quite  different 
from  the  one  in  the  case  at  bar,  insuring  specific  amounts  on 
separate  items  of  property,  contracts  have  been  held  severable. 
The  following  cases  illustrate  the  rule :  Merrill  v.  Agricul- 
tural Ins.  Co.,  73  N.  Y.  452  ;  Ilerrman  v.  Adinatic  Fire  Ins. 
Co.,  85  id.  162;  Schuster  v.  Dutchess  Co.  Ins.  Co.,  102  id. 
260 ;  Hobnes  v.  Drew,  16  Hun,  491 ;  Sunderliti  v.  jEtna  Ins. 
Co.,  18  id.  522  ;  Dacey  v.  Agricultural  Ins.  Co.,  21  id.  83  ; 
Woodward  v.  Repuhlic  Fire  Ins.  Co.,  32  id.  365  ;  Baldwin  v. 
Sartford  Fire  Ins.  Co.,  60  I^.  H.  422. 

It  is  expressly  stipulated  in  this  policy,  that  if  either  the 
real  or  personal  property,  or  any  part  of  it,  be  encumbered,  it 
must  be  so  represented  to  the  company  in  the  application; 
otherwise  the  entire  policy  and  every  part  of  it  shall  be  void. 

This  policy  is  quite  different  in  its  legal  effect  from  those 
considered  in  the  cases  cited ;  it  not  being  expressly  provided 
in  those  policies,  as  in  this,  that  a- misrepresentation  of  the 
situation  of  one  of  the  subjects  insured  should  invalidate  the 
insurance  on  all  other  property  covered  by  the  policy. 

Regarding  the  application  amended  so  as  to  conform  to  the 
testimony  produced  by  the  plaintiff,  and  then  construing  the 
application  and  policy  together  as  the  parties  have  stipulated 


474  Insurance:   Fire,  Life,  Marine.  o.  xiv. 

that  we  must,  there  was  a  breach  by  the  insured  of  the  terms 
of  the  contract  of  insurance,  which  defeats  the  plaintiff's  claim 
to  recover. 

The  judgment  should  be  reversed,  and  a  new  trial  granted, 
with  costs  to  abide  the  event. 

All   concur,  except  Brown,  J.,  dissenting;   and  Bradlei 
and  HAiaHT,  JJ.,  not  sitting. 

Judgment  reversed. 


CHAPTEK  Xy. 
oujjbkb  of  thb  new  york  standard  fire  poliot— oontiirukdi 

Kingston  Surrey  Spring  Assizes,  1870. 
CHAPMAN  V.  POLE. 

(22  L.  T.  N.  S.  806.) 
Fraud  and  overvalttation. 

AonoN  against  the  Sun  Insurance  Company,  on  a  fire 
policy.  Plea,  "  that  there  appeared  to  be,  and  was,  fraud  in 
the  claim  made  by  the  plaintiff  upon  the  company,  for  and  in 
respect  of  the  said  alleged  loss  and  damage,  etc.,  on  account  of 
the  said  loss  or  damage  delivered  to  the  company's  office." 

The  policy  was  effected  in  February,  1866.  The  fire  oc- 
curred in  the  following  September,  and  the  claim  was  made 
forthwith  for  £418  as  for  a  total  loss,  but  no  particulars  were 
delivered  until  required  under  the  conditions.  The  particulars 
of  the  claim  when  delivered  appearing — on  comparison  with 
the  salvage  and  debris — grossly  exaggerated,  payment  was 
refused.  In  November  this  action  was  brought,  and  in  Feb- 
ruary, 1867,  interrogatories  were  delivered  to  the  plaintiff, 
which,  not  being  answered,  the  action  was  stayed  until,  in 
January,  1870,  they  were  answered,  and  the  action  proceeded. 

After  the  plaintiff  made  a  claim  of  damage  to  the  amount 
of  £418,  further  particulars  being  required,  in  October  particu- 
lars of  claim  were  delivered,  claiming  large  sums  for  specific 
articles  to  each  room.  The  plaintiff  also  made  a  statutory 
declaration  in  the  usual  form,  "  that  the  said  estimate  or  account 
contains,  to  the  best  of  my  knowledge  and  belief,  a  true  and 
faithful  account  of  the  loss  and  damage  sustained  by  me  in  my 
said  goods  and  chattels,  all  of  which  were  my  own  property, 
and  were  in  and  upon  the  said  house  when  the  fire  happened, 


476  Insurance  :    Fire,  Life,  Marine.  o.  xv. 

and  were  burned,  lost,  or  damaged  by  the  fire ;  and  that  ray 
real  and  just  loss  on  the  said  goods  and  chattels  occasioned  by 
the  fire  amounts  to  £418  ;  and  I  make  this  solemn  declaration 
conscientiousl}^  believing  the  same  to  be  true."  It  had  ap- 
peared, however,  on  the  report  of  the  inspector  as  to  salvage 
and  debris,  that  it  was  impossible  there  could  have  been  the 
quantity  and  value  of  the  goods  represented ;  and  in  one  of  the 
rooms  remaining  unconsumed,  the  contents,  valued  at  £30 
were  not  worth  £3  ;  and  in  the  bed-rooms  the  remains  of  cheap 
iron  bedsteads,  worth  a  few  shillings,  were  found  in  the  place 
of  mahogany  stated  as  worth  £15  ;  while  the  debris  of  crock- 
ery, etc.,  found  would  only  represent  a  few  shillings'  worth, 
instead  of  X33,  the  value  stated ;  and  other  heads  of  claim 
were  found  in  the  same  proportion  to  exceed  the  real  value. 

The  company,  however,  having  disputed  the  claim,  and 
having  in  this  action  interrogated  the  plaintiff  as  to  the  mode 
in  which  he  had  acquired  the  goods  insured,  he  stated  in  his 
answer  that  he  had  purchased  the  greater  part  of  them  at  sales, 
and  had  them  many  years  before  the  policy,  though  some  of 
them  were  given  to  him,  and  some  by  one  Bennett,  an  attor- 
ney, now  dead.  Being  cross-examined  as  a  witness,  he  stated 
that  he  had  purchased  them  nearly  all  from  Bennett,  and  had 
given  him  between  £300  and  £400  for  them.  He  also  stated 
that  in  July  he  had  assigned  the  goods  to  one  Walker  for 
advances  to  the  amount  of  £400.  The  plaintiff  was  called, 
with  Walker,  in  support  of  his  claim,  but  could  give  no  partic- 
ulars or  vouchers.  Strong  evidence,  however,  was  given  on 
the  part  of  the  company  to  show  that  the  furniture  was  of  the 
poorest  description — not  worth  above  £50 ;  that  a  great  part 
had  been  removed  in  June,  so  that  at  the  time  of  the  fire  the 
things  in  the  house  were  not  worth  more  than  £30. 

CocKBURN,  C.  J.,  to  the  jury. — In  consequence  of  the  obser- 
vations which  have  been  made  upon  the  conduct  of  the  Insur- 
rance  Company,  I  feel  it  to  be  my  duty  to  say  that  I  consider, 
that,  in  insisting  on  a  full  and  searching  examination  into  the 
case  in  a  court  of  justice,  the  defendants,  the  Sun  Fire  Insur- 
ance Society,  have  only  discharged  their  duty  to  their  share- 
holders and  the  public.  Beyond  all  doubt,  this  is  a  case 
deserving  of  such  an  examination  and  inquiry  ;  for,  whatever 


o.  XV.  Chapman  y.  Pole.  477 

may  be  its  result,  from  beginning  to  end  the  case  presents 
itself  under  circumstances  of  grave  suspicion,  and  calling  for 
searching  inquiry.  The  issue  for  you  to  determine  in  substance 
upon  this  case  is  whether  the  plaintiff  has  made  an  honest  or 
dishonest  claim  :  the  issue  is  fraud  or  no  fraud.  If  the  defend- 
ants have  failed  to  satisfy  you  that  the  claim  was  fraudulent, 
the  plaintiff  is  entitled  to  recover ;  and,  in  that  case,  the  only 
question  will  be,  what  was  the  real  value  of  the  goods  de- 
stroyed ?  for  that  is  all  he  is  entitled,  in  any  event,  to  recover. 
But  if  you  think  the  defense  is  made  out,  and  that,  in  point 
of  fact,  with  reference  either  to  the  quantity  or  value  of  the 
goods,  the  plaintiff  knowingly  preferred  a  claim  he  knew  to  be 
false  and  unjust,  then  he  is  entitled  to  recover  nothing.  That 
is  one  of  the  conditions  in  the  policy,  and  the  company  are 
entitled  to  stand  upon  the  defense.  And  considering  how 
exposed  they  are  to  deception,  and  how  rarely  the}''  are  able  to 
establish  it  b\^  proof,  in  my  opinion  when  they  have  a  case  in 
which  the}'  are  honestly  convinced  that  fraud  has  been  perpe- 
trated, and  that  they  have  sufficient  evidence  of  it  to  submit  to 
a  jury  to  establish  it,  then  they  are  not  only  fairly  entitled,  but 
they  are  bound  to  do  so.  For  you  will  do  well  to  bear  in  mind 
that  the  rate  of  insurance  is  calculated  upon  the  average  of 
losses  as  compared  with  profits,  and  the  more  the  company  is 
subjected  to  deception  and  fraud,  the  higher  the  rate  of  pre- 
mium which  they  are  obliged  to  charge.  Tlierefore,  the  public 
have  an  interest  in  such  cases,  and  the  company  is  bound  to 
defend  them,  when  they  have  fair  ground  for  so  doing,  as  they 
certainly  have  in  this  instance.  We  must  start  in  such  a  case 
with  certain  principles.  It  is  not,  certainly,  a  question  of  mere 
accuracy  or  inaccuracy.  A  man  may  make  a  mistake  in  his 
claim,  and  it  may  be  quite  honestly.  If,  for  instance,  a  man 
either  fails  to  recollect  the  precise  quantity  of  goods  he  has  on 
his  premises  at  the  time  of  the  fire,  or  mistakes  the  value  of 
those  of  which  he  was  in  possession,  and  thus  he  presses  a 
claim  according  to  what  he  believes  honestly  to  be  true,  but 
which  may  in  the  end  turn  out  to  be  mistaken,  the  only  con- 
sequence which  ensues  is,  that,  inasmuch  as  the  contract  of  in- 
surance is  simply  a  contract  of  indemnity,  he  can  only  recover 
to  the  extent  of  the  real  value  of  the  goods  he  has  actually 
lost.     You  must  not  run  away  with  the  notion  that  a  policy 


478  Insurance  :    Fire,  Life,   Marine.  o.  xv. 

of  insurance  entitles  a  man  to  recover  according  to  the  amount 
represented  as  insured  by  the  premiums  paid.  It  is  essentially 
a  contract  of  indemnity.  If  a  man  chooses  to  insure  goods 
worth  £100  at  a  rate  of  premium  which  represents  a  value  of 
£500,  he  can  only  recover  the  real  and  actual  value  of  the 
goods.  The  law  will  not  allow  of  gambling  in  the  form  of 
insurance.  Insurance  companies  are  subject  to  fraud  enough 
as  it  is,  and,  if  persons  were  allowed  to  insure  goods  to  a 
greater  amount  than  the  real  value,  it  is  obvious  that  a  door 
would  be  open  to  fraud  and  wickedness  of  the  most  Abomin- 
able description.  Therefore,  in  all  the  cases  the  on]*^  question 
— supposing  the  claim  to  be  honest — is,  what  wus  the  real 
and  actual  value  of  the  goods  destroyed.  But  beyond  that, 
although  the  insured  has  not  caused  the  fire,  yet  if  he  has 
made  a  fraudulent  claim,  then,  on  such  a  condition  as  is  con- 
tained in  this  policy,  he  must  fall  by  the  fraud  he  has  thus 
attempted  to  perpetrate,  and  is  not  entitled  to  recover  at  all. 
Such  being  the  legal  principles  on  which  the  question  to  be 
determined  arises,  it  is  for  you  to  determine  upon  the  evidence. 
If  you  believe  the  evidence  for  the  defense,  it  is  clearly  estab- 
lished, and  it  is  a  gross  and  scandalous  case  of  fraud.  Accord- 
ing to  that  evidence  the  claim  was  grossly  excessive  not  only 
in  point  of  value,  but  as  to  the  quantity  and  character  of  the 
furniture  insured ;  and  it  is  not  easy  to  conceive  of  such  gross 
exaggeration  being  honest.  A  man  may  be  somewhat  mis- 
taken as  to  the  exact  value  or  the  precise  number  of  the  articles 
of  furniture  he  possesses,  but  he  can  scarcely  be  so  grossly 
ignorant  of  the  furniture  of  the  rooms  in  which  he  lives  and 
sleeps  as  honestly  to  represent  articles  worth  a  few  shillings 
or  pounds  as  worth  large  sums  of  money.  If,  then,  you  believe 
the  evidence  for  the  defense,  it  is  your  duty  to  find  for  the 
defendant,  as  in  that  view  a  more  scandalous  fraud  never  was 
attempted. 

Verdict  for  the  defendant 


0.  XV.  Behrens  v.  Gekmania  Fire  Ins.  Co.  479 

Supreme  Court  of  Iowa,  1884, 
BEHRENS  V.  GERMANIA  FIRE  INS.  CO. 

(64  Iowa,  19.) 
Overvaluation  to  avoid  the  policy  must  he  intentional. 

Action  on  a  policy  of  insurance  in  the  usual  form,  to  re- 
cover damages  sustained  by  the  destruction  by  fire  of  the  prop- 
erty insured.  The  defendant  pleaded  that  the  plaintiff  falsely 
and  fraudulently  overvalued  the  property  insured.  There  was 
a  trial  by  jury,  verdict,  and  judgment  for  plaintiff,  and  defend- 
ant appealed. 

Seevers,  J. — I.  The  court  instructed  the  jury  as  follows : 
"  As  to  the  defense  stated  in  the  third  instruction,  you  are 
informed,  that,  if  you  find  that  the  preponderance  of  credible 
evidence  establishes  that  plaintiff,  in  getting  the  policy  in  suit, 
made  a  false  statement  as  to  stock  purchased  and  added  to  that 
already  possessed,  or  intentionally  deceived  the  agent  Deggin. 
dorf  as  to  the  value  of  his  property,  and  thereby  obtained  the 
policy  in  suit,  the  defendant  is  entitled  to  a  verdict.  But  a 
mere  honest  mistake  as  to  value  is  not  suflBcient  to  invalidate 
the  policy,  and  thereby  defeat  plaintiff's  action."  No  excep- 
tion is  taken  to  this  instruction,  and  it  therefore  must  be  re- 
garded as  the  law  of  the  case.  The  jury  found  specially  that  the 
plaintiff  represented  the  value  of  the  property  at  the  time  he 
obtained  the  insurance  to  be  two  thousand  dollars,  and  that  its 
actual  cash  value  at  that  time  was  only  twelve  hundred  and 
forty  dollars,  and  that  the  plaintiff  at  the  time  of  procuring  the 
policy  "  did  not  knowingly,  and  with  intent  to  deceive,  misrep- 
resent the  value  of  the  property  "  insured. 

It  is  insisted  that  this  finding  is  contrary  to  the  evidence. 
We  do  not  think  this  is  so.  We  have  read  the  evidence  care- 
fully, and  are  unable  to  reach  the  conclusion  that  the  plaintiff 
purposely  and  with  intent  to  deceive  made  a  false  statement  of 
the  value  of  the  property.  The  policy  contains  this  provis- 
ion: The  "amount  of  such  loss  or  damage  is  to  be  estimated 
according  to  the  actual  cash  value  at  the  time  of  the  loss." 
Under  the  terms  of  the  policy,  the  plaintiff  could  not  possibly 
gain  anything  by  the  overvaluation.      The  evidence,  therefore, 


480  Insurance:    Fire,  Life,  Marine.  o.  xv. 

of  a  fraudulent  intent  should  at  least  be  of  a  satisfying  charac- 
ter to  warrant  us  in  disturbing  the  verdict.  We  cannot  say 
that  the  evidence  fails  to  sustain  the  special  finding. 

II.  Substantially,  it  is  insisted  that  the  overvaluation  is  so 
great,  that,  conceding  that  there  was  no  fraudulent  intent,  there 
cannot  be  a  recovery.  But,  as  we  have  seen,  the  defendant's 
liability  is  not  to  be  measured  by  the  valuation  at  the  time  the 
insurance  was  effected,  but  by  the  actual  cash  value  of  the  prop- 
erty at  the  time  it  was  destroyed.  Overvaluation  by  owners 
of  pro[)erty  is  a  usual  occurrence,  and  made  honestly ;  that  is, 
the  owner  will  place  a  higher  value  on  his  property  than  his 
neighbor,  and  we  doubt  not  this  is  well  understood  by  insur- 
ance companies,  and  we  doubt  whether  anything  short  of  a 
fraudulent  intent  should  avoid  a  policy  of  the  character  in 
question.  But,  be  this  as  it  may,  the  overvaluation  in  this 
case  is  not  so  great  as  to  justify  us  in  holding,  as  a  matter  of 
law,  that  there  cannot  be  a  recovery  on  the  policy  in  question. 
The  decided  weight  of  authoritv,  we  think,  is  in  accord  with 
this  view.  Bonham  v.  loioa  Central  Ins.  Co.,  25  Iowa,  328  ; 
Franklin  Ins.  Co.  v.  Vaughan^  92  U.  S.  516  ;  Williams  v. 
Phoenix  Fire  Ins.  Co.,  61  Me.  67  ;  Wood  on  Insurance,  §  426 ; 
Dogge  v.  North-western  Ins.  Co.,  49  Wis.  501. 

Affirmed. 


New  York  Court  of  Appeals,  1878. 
WALSH  V.   HARTFORD   FIRE  INS.   CO. 

(73  N.  Y.  5.) 

A  stipulation  or  notice  in  the  policy  limiting  the  agent's  authority  to  waive 
except  in  a  designated  manner  is,  if  truthful,  binding  upon  the  insured. 

Andrews,  J. — The  policy  contains  the  following  conditions 
and  provisions :  "  If  the  premises  hereby  insured  shall  become 
vacant  by  the  removal  of  the  owner  or  occupant,  and  so 
remain  for  more  than  fifteen  days  without  notice  to  the  com- 
pany and  consent  indorsed  hereon,  then  the  policy  shall  be 
void.  And  it  is  further  expressly  covenanted  by  the  parties 
hereto,  that  no  officer,  agent,  or  representative  of  this  company 
shall  be  held  to  have  waived  any  of  the  terms  and  conditions 
of  the  pohcy,  unless  sucli  waiver  shall  be  indorsed  hereon  in 


0.  XV.  "Walsh     .  vIartford  I'ire  Ins.  Co.  481 

writing.  This  policy  is  made  and  accepted  upon  the  above 
express  conditions." 

The  dwelhng  insured  when  the  policy  was  issued  was 
occupied  by  a  tenant  who  left  the  premises  June  3,  1875,  and 
the  house  remained  vacant  from  that  time  until  the  time  of 
the  fire,  July  23,  1875.  There  was  no  consent  to  the  vacancy 
indorsed  on  the  polic\%  and  prima  facie  the  plaintiff  was  not 
entitled  to  recover.  The  vacancy  for  more  than  fifteen  days 
before  the  fire  having  been  shown,  it  was  incumbent  upon  the 
plaintiff,  in  order  to  maintain  his  action,  to  establish  that  the 
company  had  waived  or  dispensed  with  the  condition,  or  in 
some  way  precluded  itself  from  taking  advantage  of  it.  It 
appeared  upon  the  trial  that  one  Carpenter  was  the  agent  of 
the  defendant  at  Carthage,  and  was  authorized  to  solicit  risks, 
receive  applications  for  insm^ance,  fix  rates  of  premium,  and 
issue  and  renew  policies  on  behalf  of  the  defendant.  The 
polic}'^  in  question  was  issued  by  Carpenter.  The  plaintiff's 
son,  who  acted  for  him,  met  Carpenter  on  the  day  the  dwelling 
was  vacated,  and  informed  him  that  the  tenant  was  moving 
out,  and  asked  him  to  consent  that  the  dwelling  should  remain 
vacant,  and  Carpenter  replied  that  he  would  give  his  consent. 
The  next  morning,  as  the  son  testified,  he  went  to  Carpenter's 
office  to  see  if  he  had  given  consent,  and  asked  him  if  it  was 
necessary  to  get  the  policy  and  have  the  consent  indorsed,  and 
Carpenter  replied,  "  It  was  not  necessary  ;  it  was  indorsed  on 
the  books,  and  it  was  all  right."  Carpenter  was  called  as  a 
witness  for  the  plaintiff,  and  testified:  "I  think  Mr.  Walsh, 
either  in  the  office  or  on  the  steps,  spoke  to  me  and  asked  me 
if  it  was  not  necessary  to  indorse  that  (consent)  on  the  policy. 
I  told  him  I  did  not  think  it  was,  but  I  couldn't  do  it."  Car- 
penter kept  a  register  in  which  he  entered  a  memorandum  of 
the  policies  issued  at  his  agency,  and  in  the  margin  of  the  reg- 
ister, opposite  the  memorandum  of  the  policy  in  question,  was 
entered,  in  his  handwriting,  the  words,  '"  Permission  to  be 
vacated  between  time  of  tenant  moving  out  and  another  com- 
ing in."  When  this  entry  was  made  is  left  uncertain.  Car- 
penter, when  pressed  to  state  the  time,  said,  "  I  guess  it  was 
before  the  fire,"  and  he  was  unable  to  fix  the  time  more 
definitely. 

The  plaintiff  on  the  trial  insisted  that  the  evidence  and 
81 


482  Insuranck  :    Fire,  Life,  Marine.  o.  xv. 

facts  above  recited  established  a  waiver  l)y  the  defendant  of 
the  condition  requiring  that  consent  to  a  vacancy  should  be 
indorsed  on  the  policy.  In  determining  this  question  it  is 
important  to  bear  in  mind  that  there  is  no  proof  tending  to 
show  a  waiver  by  the  company  of  the  condition,  independently 
of  the  acts  of  the  agent  Carpenter.  The  transaction  between 
the  agent  and  the  insured  was  not  known  to  the  company  until 
after  the  fire.  The  agent  made  no  report  of  the  fact  that  the 
consent  had  been  applied  lor  or  had  been  given.  In  short, 
there  was  no  recognition,  aifirmance,  or  ratification  by  the 
company  of  what  was  said  or  done  by  the  agent  upon  the 
application  of  the  plaintifl'  for  consent  that  the  premises  might 
remain  vacant.  The  question,  therefore,  whether  there  was  a 
valid  consent  that  the  dwelling  might  remain  unoccupied, 
depends  upon  the  authority  of  the  agent  to  give  such  consent 
in  any  other  mode  than  by  indorsement  upon  the  policy  ;  or,  in 
other  words,  whether  having  power  to  consent  by  indorsement 
on  the  policy,  he  could  nevertheless  bind  the  company  by  an 
oral  consent,  or  by  such  consent  accompanied  with  a  memo- 
randum thereof  made  in  his  register.  That  the  agent  was 
authorized  to  consent  to  the  vacancy  by  a  written  indorsement 
on  the  policy  is  clearly  implied  from  the  language  of  the  con- 
dition ;  and  if  the  mode  in  which  his  consent  should  be  mani- 
fested had  not  been  specified,  or  if  no  provision  upon  the 
subject  had  been  contained  in  the  policy,  we  do  not  doubt  that 
Carpenter  could  have  consented  either  orally  or  in  writing,  and 
that  his  consent  in  either  mode  would  have  bound  the  com- 
pany. He  was  the  general  agent  of  the  company  in  the 
locality  where  he  resided  to  make  contracts  of  insurance  in  its 
behalf,  and  was  vested  with  large  discretionary  powers.  The 
power  of  such  an  agent  must,  in  the  absence  of  special  restric- 
tions, be  deemed  to  include  the  power  to  modify  contracts  made 
by  him,  dispense  with  conditions,  and  do  such  acts  from  time 
to  time  as  are  necessary  to  prevent  a  forfeiture  of  policies  as  a 
consequence  of  changes  in  the  ownership,  situation,  or  occupa- 
tion of  the  insured  property. 

Insurance  corporations  organized  under  the  laws  of  one 
State  may,  and  often  do,  carry  on  their  business  in  other 
States.  They  cannot  conduct  their  business  except  through 
agents,  and  it  is  a  reasonable  and  just  inference  that  agents 


C.  XV.  Walsh  v.  IlARTFORn  Fire  Ins.  Co.  4:83 

intrusted  with  the  power  to  make  original  contracts  of  insur- 
ance have  also  the  power  to  modify  them  as  occasions  and  cir- 
cumstances require.  Nor  would  a  restriction  upon  the  power 
of  an  agent,  not  known  to  persons  dealing  with  him,  limiting 
the  usual  powers  possessed  by  agents  of  the  same  character, 
exempt  the  principal  from  responsibility  for  his  acts  and  con- 
tracts, which  were  within  the  ordinary  scope  of  the  business 
intrusted  to  him,  although  he  acted  in  violation  of  special 
instructions. 

The  company  could  itself  dispense  with  this  condition  by 
oral  consent,  as  well  as  by  writing.  Trustees^  etc.  v.  Brooklyn 
Fire  Ins.  Co.,  19  N.  Y.  305 ;  and  Carpenter,  unless  specially 
restricted,  would  have  possessed,  in  this  respect,  the  power  of 
the  principal.  But  the  policy  contains  the  provision  that  no 
agent  of  the  company  shall  be  deemed  to  have  waived  any  of 
the  terms  and  conditions  of  the  policy,  unless  such  waiver  is 
indorsed  on  the  policy  in  writing.  This  is  a  plain  limitation 
upon  the  power  of  agents,  and  can  mean  nothing  less  than  that 
agents  shall  not  have  the  power  to  waive  conditions,  except  in 
one  mode,  viz.,  by  an  indorsement  on  the  policy.  The  plaintiff 
is  presumed  to  have  known  what  the  contract  contained,  and 
the  proof  tends  to  the  conclusion  that  this  provision  was  brought 
to  his  notice.  He  saw  fit,  however,  to  accept  the  assurance  of 
the  agent  that  an  entry  in  the  register  was  sufficient.  It  is 
difficult  to  see  how,  upon  the  law  of  contracts  and  agencj^  the 
plaintiff  can  recover.  The  entry  in  the  register  was  not  an 
indorsement  on  the  policy.  The  oral  consent  was  an  act  in 
excess  of  the  known  authority  of  the  agent.  The  provision 
was  designed  to  protect  the  company  against  collusion  and 
fraud,  and  the  dangers  and  uncertainty  of  oral  testimony.  The 
case  seems  to  be  a  hard  one  for  the  plaintiff ;  but  courts  can- 
not make  contracts  for  parties,  nor  can  they  dispense  with  their 
provisions. 

The  authority  of  an  agent  is  not  only  that  conferred  upon 
him  by  his  commission,  but  also  as  to  third  persons  that  which 
he  is  held  out  as  possessing.  The  principal  is  often  bound  by 
the  act  of  his  agent  in  excess  or  abuse  of  his  actual  authority, 
but  this  is  only  true  between  the  principal  and  third  persons, 
who,  believing  and  having  a  right  to  believe  that  the  agent  was 
acting  within  and  not  exceeding  his  authority,  would  sustain 


484  Insurance  :    Fire,  Life,  Marine.  o.  iv. 

loss  if  the  act  was  not  considered  that  of  the  principal.  Clark 
V.  Metropolitan  Bank,  3  Duer,  248 ;  Story  on  Agency,  §  127 ; 
Howard  v.  Braithwalte,  1  Ves.  &  B.  209  ;  Stainer  v.  Tysen, 
3  Hill,  279 ;  Barnard  v.  WJieeler,  24  Me.  279.  The  doctrine 
is  established  to  prevent  fraud,  and  proceeds  also  upon  the 
ground  that  when  one  of  two  innocent  persons  must  suffer 
from  the  act  of  a  third  person,  he  shall  sustain  the  loss  who 
has  enabled  the  third  person  to  do  the  injury.  If,  however,  a 
person  dealing  with  an  agent  knows  that  he  is  acting  under  a 
circumscribed  and  limite<l  authority,  and  that  his  act  is  in 
excess  of  or  an  abuse  of  the  authority  actually  conferred,  then 
manifestly  the  principal  is  not  bound,  and  it  is  immaterial 
whether  the  agent  is  a  general  or  special  one.  The  principal 
has  the  unqualified  right,  as  between  himself  and  the  agent,  to 
define  and  limit  the  agent's  authority  ;  to  invest  him  with  large 
or  with  restricted  powers  only.  The  agent,  as  we  have  seen, 
may  sometimes  bind  the  principal,  although  he  transgresses  his 
instructions,  provided  his  apparent  authority  extends  to  the 
act  done,  but  this  is  a  rule  of  protection  only. 

Applying  to  this  case  these  familiar  principles,  there  can 
be  little  doubt  how  the  question  presented  in  this  case  should 
be  decided.  There  was  a  breach  of  condition  which,  by  the 
express  terms  of  the  contract,  rendered  the  policy  void.  The 
condition  was  a  lawful  one,  and  one  which  the  company  had 
the  right  to  insert  in  the  contract.  The  judge  at  the  trial  held 
the  proof  to  be  insufficient  to  establish  a  waiver  of  the  condi- 
tion, and  non-suited  the  plaintiff.  The  General  Term  reversed 
the  judgment  on  the  non-suit,  and  ordered  a  new  trial. 

We  think  this  action  cannot  be  sustained.  This  conclusion 
does  not  interfere  with  that  class  of  cases  which  have  estab- 
lished that  conditions  for  the  prepayment  of  premium  and  the 
like,  which  enter  into  the  validitj^  of  a  contract  of  insurance  at 
its  inception,  may  be  waived  by  agents,  and  are  waived  if  so 
intended,  although  they  remain  in  the  policy  when  delivered, 
and  that  a  contract  for  renewal  is  for  this  purpose  to  be  treated 
as  an  original  contract.  Trustees,  etc.  v.  Brooklyn  Fire  Ins. 
Co.,  19  N.  Y.  305 ;  Sheldon  v.  Atlantic  Fire  and  Marine  Ins. 
Co.,  26  id.  460 ;  Boehen  v.  William shurgh  Ins.  Co.,  35  id. 
131;  Bodine\.  The  Exchange  lis.  Co.,  51  id.  117;  Bowman 
\ .  Agricultural  Ins.   Co.,  59  id.  526;   Carroll  v.   Charter  Oak 


6.  XV.  Walsh  v,  Hartford  Fire  Ins.  Co.  485 

Ins.  Co..,  1  Abb.  Ct.  App.,  Dec.  316 ;  Yam,  Schoick  v.  Niagara 
Ins.  Co.,  68  N.  Y.  434.  We  think  a  recovery  cannot  be  per- 
mitted in  this  case  without  changing  the  law  of  contracts. 

The  order  granting  a  new  trial   should  be  reversed,  and 
judgment  entered  upon  the  non-suit  affirmed. 

Allen,  Rapallo,  and  Earl,  JJ.,  concur;  Church,  Ch.  J., 
FoLGER  and  Miller,  JJ.,  dissent. 

Order  reversed  and  judgment  affirmed. 


CHAPTER  XVI. 
clauses  of  the  life  pouct. 

New  York  Court  of  Appeals,  1877. 
CUSHMAN  V.  UNITED   STATES   LIFE  INS.  CO. 

(70  N.  Y.  73.) 
Warranti/  :  Meaning  of  terms  ''disease  "  and  "  usual  medical  attendant." 

Action  upon  a  policy  of  life  insurance  issued  by  defendant 
upon  the  life  of  Birt  Cushman,  plaintiff's  intestate.  The  defense 
was  a  breach  of  warranty.  The  case  upon  a  former  appeal  is 
reported  in  63  N.  Y.  404. 

At  the  close  of  the  evidence  defendant's  counsel  moved  for 
a  non-suit,  on  the  ground  that  the  evidence  showed  a  breach  of 
warranty  in  answers  by  the  insured  to  the  following  questions 
in  the  application  :  "  Has  the  party  had  .  .  .  disease  of  the 
liver  ?  "  Answer,  "  No."  "  Or  any  serious  disease  ? "  Answer, 
"  No."  "  Give  name  and  residence  of  party's  usual  medical 
attendant."  Answer,  "  Charles  Purdy,  M.D.,  Norwich."  The 
motion  was  denied,  and  said  counsel  duly  excepted. 

Earl,  J. — It  is  claimed  that  there  was  a  breach  of  warranty 
in  answering  "  No"  to  the  question  in  the  application  whether 
the  applicant  "had  ever  had  disease  of  the  liver."  Dr. 
Ormsby,  a  young  physician,  who  was  admitted  to  practice  in 
1868,  attended  the  insured  in  July,  1870,  for  four,  five,  or  six 
days,  and  he  testified  that  he,  in  his  judgment,  had  congestion 
of  the  liver.  It  does  not  appear  that  his  symptoms  were  very 
marked.  He  was  not  much  sick,  was  dressed  every  day,  and 
up  and  around  more  or  less,  and  soon  recovered.  He  again 
attended  him  in  July,  1871,  for  a  similar  sickness,  still  less 
serious,  visited  him  two  or  three  times,  and  treated  him  for 
oongestion  of  the  liver.     In  1872,  after  the  policy  was  issued, 


o.  XVI.       CusHMAN  V.  United  Statrs   Life  In8.  Co.  487 

he  treated  him  again,  for  five  days,  for  the  same  complaint ; 
and  in  1873  he  again  attended  him  for  a  few  days  in  his  last 
illness,  and  testified  that  he  then  had,  and  died  of,  acute  con- 
o^estion  of  the  liver.     The  evidence  tended  to  show  that  the 
assured   was  not  much  sick  at   any  of   the   times   when  Dr. 
Oi'msby  visited  him  prior  to  his  last  sickness  ;  that  he  was  not 
confined  to  his   bed ;  that   he  was  up  and  around  ;  that   he 
speedily  recovered  ;  and  that,  during  all  the  3^ears  prior  to  his 
last  sickness,  he  was  capable  of  vigorous  labor  and  great  endur- 
ance, and  was  apparently  a  sound,  healthy  man.     In  Novem- 
ber, 1871,  Dr.   Purdy,  defendant's  examining  physician,  who 
had  known  the  assured  for  many  years,  examined  him  upon  his 
application  for  insurance,  and  found  his  liver  sound  and  free 
from  disease.     He  was  called  to  attend  him  in   consultation 
with  Dr.  Ormsby,  in  his  last  sickness,  shortly  before  his  death^ 
and  testified  that,  from  the  symptoms  detailed  to  him  by  Dr 
Ormsby,  he  did  not  die  of  congestion  of  the  liver,  but  of  inflam- 
mation of  the  bowels,  thus  contradicting  Dr.  Ormsby  as  to  the 
cause  of  death.     Taking  into  consideration  all  the  evidence,  it 
cannot  be  said  that  it  was  so   conclusively  shown  that  the 
assured  had  had  congestion  of  the  liver  prior  to  the  date  of  the 
policy  as  to  leave  nothing  for  the  determination  of  the  jury. 
Taking  into  consideration  the  symptoms  of  the  sickness,  the 
degree  of  skill  and  the  extent  of  the  examination  of  the  doctor, 
the  very  slight  nature  of  the  sickness  and  the  speedy  and  com- 
plete recovery,  and  all  the  other  circumstances,  it  was  for  the 
jury  to  determine  whether,  prior  to  the  insurance,  the  assured 
had  had  congestion  of  the  liver.     But,  even  if  he  had  had  sucli 
congestion,  it  does  not  follow  that,  within  the  meaning  of  the 
policy,  he  had  had  a  disease  of  the  liver.     In  construing  con- 
tracts words  must  hav6  the  sense  in  which   the  parties  used 
them  ;  and,  to  understand  them  as  the  parties  understood  them, 
the  nature  of  the  contract,  the  objects  to  be  attained,  and  all 
the    circumstances    must   be   considered.      By   the   questions 
inserted  in  the  application  the  defendant  was  seeking  for  infor- 
mation bearing  upon  the  risk  which  it  was  to  take,  the  probable 
duration  of  the  life  to  be  insured.     It  was  not  seeking   for 
information  as  to  merely  temporary  disorders  or  functional  dis- 
turbances having  no  bearing  upon  general  health  or  continuance 
of  life.     Colds  are  generally  accompanied  with  more  or  less 


488  Insurance  :   Fire,  Life,  Marine,  o.  xvi. 

congestion  of  the  lungs,  and  yet  in  such  a  case  there  is  no  dis- 
ease of  the  lungs  which  an  applicant  for  insurance  would  be 
bound  to  state.  So  most,  if  not  all,  persons  will  have  at  times 
congestion  of  the  liver,  causing  slight  functional  derangement 
and  temporary  illness ;  and  yet,  in  the  contemplation  of  parties 
entering  into  contracts  of  life  insurance,  and  having  regard  to 
general  health  and  the  continuance  of  life,  it  may  safely  be 
said  that  in  such  cases  there  is  no  disease  of  the  liver.  In  con- 
struing a  policy  of  life  insurance  it  must  be  generally  true  that, 
before  any  temporary  ailment  can  be  called  a  disease,  it  must 
be  such  as  to  indicate  a  vice  in  the  constitution,  or  be  so  serious 
as  to  have  some  bearing  upon  general  health  and  the  continu- 
ance of  life,  or  such  as,  according  to  common  understanding, 
would  be  called  a  disease ;  and  such  has  been  the  opinion  of 
text  writers  and  judges.  2  Park,  on  Ins.  933,  935  ;  Chattock  v. 
Shawe,  1  Moody  &  K.  498  ;  FoxoTces  v.  The  M.  cfc  Z.  Life  Ins. 
Co.,  3  Foster  and  Fin.  440  ;  Barteau  v.  The  Phoenix  MtU.  Life 
Ins.  Co.,  3  T.  &  C.  (N.  Y.  Sup.  Ct.  R.)  578 ;  Peacock  v.  New 
York  Life  Ins.  Co.,  20  ¥.  Y.  293  ;  Ilighie  v.  Guardian  Mut. 
Life  Ins.  Co.,  53  N.  Y.  603 ;  Fitch  v.  Am.  Pop.  Life  Ins.  Co., 
59  N.  Y.  557,  571.  Hence,  whether  the  assured  had  had  con- 
gestion of  the  liver,  and  whether  such  congestion  was  of  such 
a  character  as  to  constitute  a  disease  of  the  liver  within  the 
meaning  of  the  policy,  were  both  questions  properly  submitted 
to  the  jury,  and  their  determination  thereon  is  conclusive. 

The  assured  also  answered  "  No "  to  the  question  in  the 
application  whether  he  "  had  had  any  serious  disease."  It  can 
hardly  be  claimed  that  there  was  any  evidence  showing  this 
answer  to  have  been  untrue.  But  whether  it  was  true  or  not, 
for  reasons  above  stated,  it  was  at  least  a  question  of  fact  upon 
all  the  evidence  for  the  jury. 

To  the  question  as  to  the  "name  and  residence  of  the 
party's  usual  medical  attendant,"  the  assured  answered,  "  Dr. 
Charles  Purdy,"  and  it  is  claimed  that  his  answer  was  untrue. 
In  1867  Dr.  Greenleaf  attended  the  assured  when  he  was  sick 
with  some  trouble  of  the  bowels,  from  the  14th  to  the  30th 
day  of  August,  and  he  never  attended  him  before  or  after  that 
time.  Dr.  Ormsby  attended  him  prior  to  the  date  of  the  policy 
only  in  July,  1870,  and  July,  1871,  as  above  stated.  The 
assured  was  a  single  man,  who  had  always  prior  to  his  insurance 


0.  XVI.        CusHMAN  V.  ITnitkd  States  Life  Ins.  Co.  489 

lived  in  his  futluir's  family,  and  Dr.  Purely  had  for  many  years 
Deen  the  family  physician.  Ho  had  frequently  attended  different 
members  of  the  family,  but  had  never  been  called  to  the  house  to 
attend  the  assured  except  in  his  last  sickness  ;  but  during  many 
years  the  assuied  had  called  upon  him  every  year,  and  some- 
times several  times  a  year,  and  consulted  him  as  physician.  It 
is  quite  evident  that  he  knew  more  about  the  health  and  con- 
stitution of  the  assured  than  any  other  doctoi-.  To  constitute 
a  medical  attendance,  it  is  not  requisite  that  a  physician  should 
attend  the  patient  at  his  home;  an  attendance  at  his  own 
office  is  sufficient.  Of  these  three  physicians,  then,  who  was 
the  "■  usual  medical  attendant"?  It  certainly  was  not  Dr. 
Greenleaf,  who  had  attended  him  during  but  one  brief  illness, 
and  never  before  or  after.  Was  it  Dr.  Ormsby,  who  had 
attended  him  on  two  occasions,  visiting  him  in  all  probably  not 
over  half  a  dozen  times  ?  Or  was  it  Dr.  Purdy,  the  family 
physician  in  his  father's  family,  upon  whom  he  called  yearly 
for  many  years  for  medical  advice  or  treatment?  I  think  Dr. 
Purdy  could  more  properly  be  called  the  usual  medical  attenti- 
ant ;  but,  whether  this  be  so  or  not,  it  was  at  least  a  question 
for  the  jury,  and  there  w^as  no  error  in  submitting  it  to  them. 

But  the  policy  contained  a  clause  in  which  the  defendant 
promised  to  pay  the  amount  insured  "  in  three  months  after  due 
notice  and  satisfactory  proof  of  the  death  during  the  continuance 
of  thispolicj^of  the  .  .  .  assured  .  .  .  and  proof  of  the 
just  claim  of  the  assured."  After  the  death  of  the  assured, 
the  plaintiff  delivered  to  the  defendant  claim  and  proof  of  loss, 
signed  and  verified  by  himself.  Annexed  thereto  was  the 
statement  of  Dr.  Ormsby,  as  physician  in  attendance  upon  the 
assured  in  his  last  illness,  as  to  the  cause  of  his  death ;  and  in 
that  statement,  in  answer  to  the  question,  "  How  long  have  you 
been  the  attendant  or  family  physician  ? "  he  answered,  "  Five 
years."  It  is  contended  that  this  answer  shows  that  Dr.  Purdy 
was  not  "  the  usual  medical  attendant  "  of  the  assured  prior  to 
the  date  of  the  policy,  and  hence  that  there  was  a  breach  of 
warranty  rendering  the  policy  void,  and  that  therefore  there 
was  no  "  proof  of  just  chiim  "  as  required  by  the  policy.  To 
this  contention  there  are  several  satisfactory  answers.  The 
answer  made  in  August,  1873,  that  Dr.  Ormsby  had  been  the 
*'  attending  physician  "  of  the  assured  for  five  years,  does  not 


490  Insurance  :    Fire,  Life,  Marine.  o.  xti. 

necessarily  show  that  the  answer  made  at  the  time  of  the 
insurance  in  ISTovcinber,  1871,  that  Dr.  Purdy  had,  prior  to 
that  time,  been  the  •'  usual  medical  attendant,"  was  absolutely 
untrue.  A  party  may  have  several  "  attending  physicians " 
and  one  "  usual  medical  attendant."  But  a  still  better  answer 
is,  that  the  plaintiff  was  not  whoiiy  responsible  for  the  state- 
ments made  by  Dr.  Ormsby.  He  had  made  his  statement, 
showing  a  "just  claim"  against  the  defendant  for  the  amount 
insured,  and  in  that  statement  there  was  nothing  in  conflict 
with  any  warranty  contained  in  the  policy.  This  statement, 
we  may  infer  from  the  form  of  blank  furnished  by  the  com- 
pany, the  plaintiff  was  required  to  procure  from  the  physician 
who  attended  the  assured  in  his  last  illness.  The  main  object 
of  this  statement  was  to  furnish  the  company  evidence  of  the 
death,  and  the  cause  and  circumstances  thereof.  There  can  be 
no  reason  for  holding  the  plaintiff  responsible  for  any  misstate- 
ment contained  therein  not  caused  by  him.  He  was  responsible 
for  the  statement  made  bv  himself,  but  not  for  the  statements 
which  he  was  required  to  procure  from  the  attending  physician, 
the  officiating  clergyman,  and  the  undertaker.  Such  state- 
ments were  procured  at  the  request  of  the  defendant  for  its 
information,  and  it  must  take  them  for  what  they  may  be 
worth.  The  plaintiff  had  no  means  of  compelling  answers  in 
auch  statements  to  suit  himself.  If  the  answers  were  not  satis- 
factory, or  were  in  conflict  with  any  answers  contained  in  the 
application  for  the  insurance,  the  defendant  could  have  in- 
stituted further  inquiries,  or  asked  for  further  explanations 
from  the  plaintiff.  This  it  did  not  do.  So  far  as  it  appears,  it 
made  no  objection  to  the  proof  of  loss,  and  did  not  in  answer, 
or  at  any  prior  time,  allege  the  discrepancy  now  noticed  as  a 
reason  for  refusing  to  pay  the  amount  insured.  It  cannot 
claim  to  have  been  misled  by  the  statement  of  Dr.  Ormsby 
into  a  defense  of  the  action,  even  if  that  were  material,  as  this 
defense  was  not  alluded  to  in  the  answer,  and  other  special 
defenses  were,  and  were  also  litigated  upon  the  trial,  and  there 
was  no  evidence  that  it  was  so  misled.  There  was,  therefore, 
nothing  to  prevent  the  plaintiff  from  proving  upon  the  trial 
the  truth  as  to  who  was  the  usual  medical  attendant  of  the 
assured     Life  Ins.  Co.  v.  Francisco,  17  Wail.  672. 

Judgment  affirmed. 


0.  XVI.  Cobb  v.  Covenant  Mut.  Ben.  Asso.  491 

Supreme  Judicial  Court  of  Massachusetts,  1891. 

COBB  V.  COVENANT   MUT.   BEN.   ASSO. 

(153  Mass.  176.) 
Warranty  as  to  medical  treatment  and  consulting  a  physician. 

Devens,  J. — By  the  terms  of  his  apphcation,  which  is 
referred  to  and  made  a  part  of  the  benefit  certificate  issued  to 
the  insured,  he  warranted  the  answers  to  the  questions  pro- 
pounded "  to  be  full,  complete,  and  true,"  and  agreed  that  the 
answers  and  application  should  form  the  exclusive  and  only 
basis  of  the  contract  between  himself  and  the  defendant,  and 
further  agreed  that,  if  "  an}'^  misrepresentations  or  fraudulent 
or  untrue  answers"  had  been  made,  the  contract  should  be  null 
and  void.  The  case  at  bar  difi'ers  obviously  from  those  in 
which  an  applicant  has  averred  that  the  answers  made  by  him 
are  true  according  to  his  best  knowledge  and  belief,  or  has 
limited  his  statement  by  other  similar  words.  Such  answers, 
if  accepted  by  the  insurer,  would  render  it  necessary  for  them 
to  prove  that,  as  thus  limited,  they  were  untrue.  Clapp  v. 
Association,  146  Mass.  529. 

The  sixth  question  in  Form  A  of  the  application  was  : 
"Have  you  personally  consulted  a  physician,  been  prescribed 
for,  or  professionally  treated  within  the  past  ten  years  ?  "  To 
this  question  the  insured  answered,  "  No ; "  and  it  has  been 
found  by  the  jury,  upon  an  issue  submitted  to  them,  that  this 
answer  was  false.  The  plaintiff  contended  that  such  an  issue 
should  only  be  found  against  him  in  case  the  answer  was  inten- 
tionally false.  In  our  view,  the  insured  having  made  the  truth 
of  his  statements  the  basis  of  his  contract,  it  was  suJBBcient  for 
the  defendant  to  show  that  this  statement  was  actually  untrue. 
The  plaintiff  further  claimed  that  the  question  referred  to  in 
the  application  should  be  construed  as  referring  to  a  specific 
disease,  and  that,  if  the  insured  had  consulted  or  been  pre- 
scribed for  by  a  physician  for  a  pain  that  did  not  amount  to 
a  disease,  his  answer  to  this  question  would  not  prevent  the 
plaintiff  from  recovering.  The  presiding  judge  declined  to 
instruct  in  accordance  with  this  contention,  and  instructed  the 
jury  that  if  Cobb,  the  insured,  being,  as  he  supposed,  in  need 
of  a  physician,  went  to  one  for  the  purpose  of  consulting  hiu 


492  Insurance  :   Fire,  Life,  Marine.  o.  3     . 

as  to  what  tlie  matter  was  with  him,  had  an  interview,  answer- 
ing such  inquiries  as  the  physician  deemed  pertinent,  receiving 
aid,  advice,  or  assistance  from  him,  Cobb  "  consulted  "  ii.  phy- 
sician within  the  meaning  of  the  interrogatoiy  ;  and,  further, 
that  if  they  found  that  he  went  to  a  physician  for  the  purpose 
of  procuring  aid  and  assistance  from  the  physician  as  such,  and 
the  physician  prescribed  a  remedy,  or  treated  him  profession- 
ally either  by  giving  him  a  prescription  or  by  administering 
hypodermic  injections  of  morphine,  of  which  there  was  some 
evidence,  then  he  was  professionally  "  treated "  within  the 
meaning  of  the  interrogatory,  or  professionally  "  prescribed 
for."  This  ruling  appears  to  us  correct.  While  the  question 
whether  Cobb  had  a  fixed  disease,  and  what  the  disease  was, 
might  be  an  inquiry  involved  in  considerable  embarrassment, 
the  question  whether  he  had  consulted  a  physician,  or  had  been 
professionally  treated  by  one,  was  simple,  and  one  about  which 
there  could  be  no  misunderstanding.  Had  it  been  replied  to  in 
the  affirmative,  the  answer  would  have  led  to  other  inquiries. 
Indeed,  the  question  which  follows  is,  "  If  so,  give  dates,  and 
for  what  disease."  It  is  upon  the  existence  of  this  latter  ques- 
tion that  the  plaintiff  founds  an  argument  that  it  was  neces- 
sary to  show  that  Cobb  had  some  distinct  disease  permanently 
affecting  his  general  health  before  it  could  be  said  that  he 
answered  this  question  untruthfully.  But  the  scope  of  the 
question  cannot  be  thus  narrowed.  Even  if  Cobb  had  only 
visited  a  physician  from  time  to  time  for  temporary  disturb- 
ances proceeding  from  accidental  causes,  the  defendant  had  a 
right  to  know  this,  in  order  that  it  might  make  such  further 
investigation  as  it  deemed  necessary.  By  answering  the  ques- 
tion in  the  negative,  the  applicant  induced  the  defendant  to 
refrain  from  doing  this.  In  Insurance  Co.  v.  McTague  (49  N. 
J.  Law,  587),  it  was  held  that  where  the  applicant  stated  that 
he  had  not  consulted  a  physician,  or  been  prescribed  for  by  one, 
and  such  statement  was  shown  to  have  been  false  by  proof  of  a 
prescription  received,  there  could  be  no  recovery,  although  it 
appeared  to  have  been  given  for  a  cold.  The  court  says : 
"The  representation  did  not  aver  a  condition  of  health,  or  that 
it  was  requisite  or  proper  to  consult  a  physician.  It  averred  that 
he  had  not  consulted  a  physician,  or  been  prescribed  for  by  a 
physician.     The  fact  found  contradicted  this  averment,  whether 


0.  XVI.  Cobb  v.  Covenant  Mut.  Ben.  Asso.  498 

the  consultation  and  prescription  related  to  a  real  disease  or  an 
apprehended  disease."  After  retiring,  the  jury  retui-ned  into 
court  with  a  request  that  the  court  would  define  the  word  "pre- 
scription." There  was  evidence  in  the  case  from  three  physi- 
cians tending  to  show  that,  on  more  than  one  occasion,  they  had 
consulted  with  him,  administered  hypodermic  injections  for  the 
pain  which  he  was  suffering,  and  also  given  him  medicine.  The 
presiding  judge  instructed  the  jury  fully  as  to  the  meaning  of  a 
"  prescription,"  and  added  that,  if  the  insured  went  to  one  of 
those  physicians  and  received  from  him  a  medicine  as  a  physi- 
cian, for  the  purpose  of  assistance  and  relief  in  a  difficulty 
under  which  he  was  then  suffering,  then  it  is  a  '*  prescription  " 
within  the  meaning  of  the  law.  The  judge  added  :  "  And  it  is 
your  duty  as  jurors  so  to  find,  whether  the  consequences  may 
be  as  you  would  wish  them,  or  otherwise."  The  plaintiff  ex- 
cepting to  the  last  paragraph  as  a  charge  upon  the  facts,  the 
presiding  judge  modified  this,  and  said  :  "  I  will  endeavor  in 
this  way  to  define  a  '  prescription,'  and  let  this  definition  stand 
for  the  definition  objected  to :  If  the  insured  went  to  a  physi- 
cian for  the  purpose  of  getting  his  aid,  advice,  or  assistance  as 
a  physician  in  a  difficulty  under  which  he  was  then  suffering, 
or  supposed  himself  to  be  suffering,  and  tne  physician,  hearing 
what  the  insured  had  to  say,  as  a  physician,  and,  for  the  pur- 
pose of  relief,  or  cure,  or  aid,  or  assistance,  gave  to  the  insured 
medicine,  then  it  may  be  said  that  such  a  physician  prescribed 
for  him."  To  this  the  plaintiff  also  objected  as  a  charge  upon 
the  facts,  and  claimed  tliat  the  jury  should  have  been  instructed 
that  the  word  ''  prescription '"  was  a  word  in  common  use, 
which  they  could  clearly  define  as  well  as  the  court.  This 
latter  instruction  leaves  clearly  to  tlje  jury  the  inquiry  whether 
the  insured  had  gone  to  the  pliysiciau  and  received  from  him 
aid,  assistance,  medicine,  etc.,  in  answer  to  his  application.  We 
cannot  see  that  it  has  any  element  of  a  charge  upon  the  facts. 
The  definition  of  a  ''  pi'escription  "  was  entirely  correct,  nor, 
even  if  a  word  in  common  use  was  explained,  was  there  reason 
why  the  judge  should  not  define  it  in  answer  to  the  request,  if 
he  gave  them  an  accurate  definition. 

The  plaintiff  also  insists  that  the  last  clause  of  the  definition 
as  first  given  was  a  charge  upon  the  facts.  Tt  is  perhaps  suf- 
ficient to  say  that  it  was  clearly  withdrawn,  and  the  later  defi- 


494  Insurance  :   Fire,  Life,  Marine.  o.  xvi. 

nition  given  in  the  place  of  it.  We  do  not,  however,  consider 
the  last  clause  of  the  first  definition  as  a  "charge"  upon  the 
facts  within  the  meaning  of  Pub.  Stat.,  c.  153,  §  5.  The  judge 
had  defined  the  word  as  to  the  meaning  of  which  they  had 
inquired,  and  submitted  to  them  in  a  condensed  way  the  evi- 
dence bearing  upon  the  issue  which  they  were  to  determine. 
Certain  facts,  if  they  find  them  to  exist,  he  informs  the  jury, 
will  make  a  "  prescription  "  by  a  physician,  within  the  mean- 
ing of  the  law.  He  then  adds :  "  And  it  will  be  your  duty  as 
jurors  so  to  find,  and  it  is  your  duty  so  to  find,  whether  the 
consequences  may  be  as  you  would  wish  them  to  be,  or  other- 
wise." Although  the  last  clause  is  a  caution  to  the  jury  to  dis- 
regard the  consequences  which  may  follow  their  decision,  there 
is  no  reason  why  a  judge,  when  he  deems  it  proper  to  do  so  in 
the  trial,  may  not  caution  the  jury  not  to  be  swayed  by  sympa- 
thy, prejudice,  or  passion,  and  direct  them  to  be  governed  in 
their  finding  by  the  facts  as  they  exist,  without  regard  to  the 
results  that  may  follow  therefrom. 

Bill  dismisged. 


CHAPTEE   XYII. 

clauses  of  thk  life  policy conoludkd. 

Iowa  Supreme  Court,  1880. 
CRITCHETT  v.   THE   AMERICAN   INS.   CO. 

(53  Iowa,  404.) 

7%e  ordinary  canvassing  agent  has  no  authority  to  extend  the  time  for  payment 
of  premiums  contrary  to  the  terms  of  the  policy,  but  if  employed  to  deliver 
the  policy  he  has  thereby  an  implied  authority  to  determine  how  the  premium 
due  at  the  time  of  such  delivery  shall  be  paid. 

Action  upon  a  policy  of  insurance.  The  defendant  alleges 
that  the  plaintiff  was  in  default  at  the  time  of  the  loss  by 
reason  of  the  non-payment  of  an  installment  of  the  premium. 
For  a  portion  of  the  premium  the  company  had  taken  the 
plaintiff's  note,  whereby  he  had  obligated  himself  to  pay  the 
company  three  dollars  upon  the  first  day  of  November,  1876,  and 
the  same  amount  upon  the  first  day  of  November  in  each  of 
the  three  succeeding  years.  The  policy  contained  a  provision 
in  these  words  :  "  If  default  shall  be  made  by  the  assured  in 
the  payment  of  any  installment  of  premium  upon  the  install- 
ment note  given  for  this  policy  for  the  space  of  thirty  days 
after  such  installment  shall  become  due,  by  the  terms  of  such 
note,  then  this  policy  shall  be  null  and  void,  and  this  company 
shall  not  be  liable  to  pay  any  loss  happening  during  the  con- 
tinuance of  such  default  in  payment  of  such  installment ;  but 
on  payment  by  the  assured  or  his  assigns  of  all  installments  of 
pi-emium  due  under  this  policy,  or  upon  the  installment  note 
given  therefor,  the  liabilitj'^  of  the  company  under  the  policy 
shall  attach,  and  this  policy  be  in  force  as  to  all  the  losses  hap- 
pening after  such  payment,  unless  it  shall  be  inoperative  from 
some  other  cause." 

The  installment  falling  due  Nov.  1,  1876,  was  not  paid. 


496  Insueance  :   Fire,  Life,  Marine.  o.  xvii. 

The  loss  occurred  March  9,  1877.  There  was  a  trial  by  jury, 
and  verdict  and  judgment  were  rendered  for  the  plaintiff.  The 
defendant  appeals. 

Adams,  Ch.  J. — The  plaintiff  claims  that  he  was  not  in  de- 
fault at  the  time  the  loss  occurred,  notwithstanding  the  non- 
payment of  the  installment,  which,  by  the  terms  of  his  note, 
fell  due  on  the  first  day  of  November,  1S76.  He  claims  that  the 
company  had  extended  the  time  of  payment.  As  evidence  of 
such  extension,  he  testified  that  one  Kennedy,  the  agent  of  the 
company  at  Oskaloosa,  near  where  he  resided,  agreed  with  him 
after  the  installment  became  due  to  extend  the  time  of  payment 
until  he  (plaintiff)  should  receive  a  certain  pension ;  that  he 
received  his  pension  March  8,  1877,  and  on  the  same  day  went 
to  Kennedy's  office  to  pay  the  installment  due  upon  his  insur- 
ance note,  but  did  not  find  him,  and  on  the  next  day,  about  four 
o'clock  in  the  afternoon,  the  property  insured  was  destroyed 
by  fire. 

The  defendant  denies  that  any  agreement  for  extension  was 
made  between  the  plaintiff  and  Kennedy,  and  introduced 
Kennedy  as  a  witness,  who  testified  that  none  was  made. 
Upon  this  point  the  jury  found  against  the  defendant,  and,  the 
evidence  being  conflicting,  their  finding  must  be  taken  as  con- 
clusive. But  the  defendant  insists  that,  conceding  that  Kennedy 
agreed  to  an  extension,  the  defendant  would  not  be  bound  by 
it,  because  Kennedy  had  no  authoritj'  to  bind  the  company  in 
that  respect ;  and  further,  if  he  had,  that  the  plaintiff  cannot 
recover,  because  the  loss  occurred  after  the  time  as  extended, 
and  the  plaintiff  had  not  paid  even  then. 

Kennedj^'s  authority  was  shown  by  the  certificate  of  his 
appointment  introduced  in  evidence.  From  it,  it  appears  that 
he  was  authorized  to  receive  applications  for  insurance,  and 
collect  and  transmit  premiums.  Kennedy  testified  that  he  was 
not  authorized  to  issue  policies,  and  it  is  not  pretended  that  he 
was. 

The  court  instructed  the  jury,  in  substance,  that  the  plain- 
tiff would  be  entitled  to  recover  if  they  found  that  Kennedy 
agreed  to  extend  the  time  of  pa3nnent,  and  that  the  loss  oc- 
curred within  such  time.  The  giving  of  this  instruction  is 
assigned  as  error. 


o.  XYii.  Critohett  v.  The  American  Ins.  Co.  497 

According  to  the  terras  of  the  pohcy,  the  company  ceased 
to  carry  the  risk  at  the  end  of  thirty  days  from  the  time  the 
installment  became  due.  If  the  company  continued  to  carry 
it,  it  was  b}^  reason  of  a  contract  not  contained  in  the  policy, 
and  that  contract  must  have  been  the  alleged  contract  with 
Kennedy.  Now,  what  precisely  was  that  contract,  taking  the 
plaintiff's  statement  as  to  what  it  was?  He  says  :  "  He  (Ken- 
nedy) agreed  he  Avould  give  me  time  to  get  my  pension." 
From  this  it  will  be  seen  that  Kennedy  did  not  undertake  to 
contract  that  the  company  would,  without  payment,  continue 
to  carry  the  risk  after  it  had  ceased  by  the  terms  of  the  policy. 
It  is  doubtful,  indeed,  whether  he  even  meant  to  bind  the  com- 
pany not  to  enforce  payment  of  the  installment  before  plaintiff 
could  get  his  pension.  The  words  do  not  necessarily  mean 
more  than  that  he  would  not  himself  enforce  it. 

But  we  are  of  the  opinion,  that,  if  Kennedy  had  expressly 
contracted  that  the  company  should  carry  the  risk  without 
payment  after  it  had  ceased  by  the  terms  of  the  policy,  such 
contract  would  not  have  bound  the  company.  There  is  no 
pretense  that  Kennedy  had  any  express  authority  to  bind  the 
company  by  any  contract  whatever.  He  belonged  to  an  ex- 
tensive and  well-recognized  class  of  insurance  agents,  from 
whom  the  power  to  make  contracts  is  withheld.  If  he  had 
the  power  to  contract  in  the  name  of  the  company  to  carry  the 
risk  without  pajnnent  after  it  had  ceased  by  the  terms  of  the 
polic}',  it  is  because  the  law  would  imply  such  power  from 
the  fact  that  he  was  authorized  to  collect  and  transmit  pre- 
miums. But  an  agent  employed  to  collect  a  claim  does  not 
thereby  have  authorit}'  to  bind  his  principal  even  to  grant  an 
extension  of  time.  Hutchings  v.  Munger^  41  K.  Y.  155  ;  Kirk 
V.  Hiatt,  2  Carter  (Ind.),  323;  Cornmg  v.  Strong,  1  Carter 
(Ind.),  329.  Still  less  would  such  agent  have  authority  to  bind 
his  principal  by  a  contract  of  insurance.  We  have  seen  no 
case  where  the  doctrine  contended  for  by  plaintiff  has  been 
held.  "We  do  not  say  that  where  a  policy  is  delivered  by  an 
agent  without  the  prepayment  of  the  premium  it  will  not  take 
effect,  even  though  the  agent  have  no  authority  to  pass  upon 
and  accept  the  risk,  and  even  though  the  policy  provides  that 
it  shall  not  take  effect  unless  the  premium  is  prepaid.  Where 
an  agent  is  intrusted  with  a  policy  for  the  purpose  of  deliver^ 
33 


498  Insueanoe  ;   Fire,  Life,  Marine.  a  xrn. 

ing  it,  and  does  deliver  it,  though  in  violation  of  a  provision 
of  the  policy  as  to  prepayment,  it  has  been  held  that  the  as- 
sured has  a  right  to  assume  that  prepayment  has  been  waived. 
Young  v.  Hartford  Fire  Ins.  Co.,  45  Iowa,  377;  Bowman  v. 
Agricultural  Ins.  Co.,  59  N.  Y.  521 ;  Mississippi  Valley  Ins. 
Co.  V.  Neylandy  9  Bush.  430 ;  Sheldon  v.  Conn.  Mut.  Ins.  Co., 
26  Conn.  9. 

But  the  waiver  rests  not  simply  upon  sometnmg  said  by 
the  agent  which  could  be  construed  into  an  agreement  of 
waiver,  but  upon  something  done  by  the  agent  which  he  was 
employed  to  do.  The  authorities  all  agree  that  a  mere  agree- 
ment to  waive  prepayment  will  not  put  a  policy  in  force  where 
it  is  not  delivered.  It  is,  therefore,  the  delivery  of  the  policy 
which  constitutes  the  ground  of  waiver. 

It  is  true  that  in  Ilallock  v.  Commercial  Insurance  Co.,  2 
Dutcher,  268,  a  recovery  was  allowed  although  the  premium 
had  not  been  paid  nor  the  policy  delivered.  But  the  agree- 
ment for  the  insurance  had  been  made  and  the  premium  ten- 
dered, which  the  agent  declined  to  receive  because  the  policy 
was  not  made  out. 

In  Trustees  of  Baptist  Church  v.  Brooklyn  Ins.  Co.,  19 
N.  y.,  305,  there  was  a  parol  contract  for  a  renewal,  but  no 
payment  of  the  renewal  premium.  It  was  held  that  the 
plaintiff  was  entitled  to  recover.  That  case  was  substantially 
like  the  case  at  bar,  except  that  the  contract  was  made  by  the 
officers  of  the  company  and  not  by  an  agent.  The  principle 
decided,  therefore,  was  materially  different. 

Nor  does  the  case  at  bar  come  within  the  rule  held  in  Yiele 
v.  Qermania  Ins.  Co.,  26  Iowa,  9.  That  was  a  case  where  the 
risk  was  increased  by  the  act  of  the  assured  contrary  to  the 
provisions  of  the  policy.  It  appeared,  however,  that  the  agent 
assented  to  the  use  of  the  premises  by  reason  of  which  the  risk 
was  increased.  Sucii  assent  was  held  to  be  a  waiver  of  the 
forfeiture.  The  docti-ine  of  that  case  is  unquestionably  correct, 
but  it  rests  upon  the  fact  that  the  agent  is  made  the  judge  as 
to  whether  a  given  use  is  an  increase  of  risk  or  not.  Mr.  Jus- 
tice Beck,  who  wrote  the  opinion,  said  :  "  The  agent  is  charged, 
by  the  terms  of  the  policy  on  which  this  suit  is  based,  with  the 
power  to  determine  whether  the  risk  is  increased.  If  he  so 
determines,  he  may  cancel  the  policy  and  put  an  end  to  the 


0.  XVII.  Critohett  v.  The  American  Ins.  Co.  499 

contract.  This  involves  the  necessity  of  examination  of  the 
condition  of  the  insured  property  during  the  life  of  the  policy, 
and  constant  watchfulness  to  protect  the  interest  of  the  under- 
writers. If  he  determines  that  the  risk  is  increased,  such  deter- 
mination is  final.  Such  being  the  great  and  extraordinary 
powers  of  the  agent,  it  follows  that  he  is  clothed  with  the 
power  to  dispense  with  conditions  and  waive  the  effect  of 
breaches  thereof  in  contracts  of  insurance  made  by  him.  If  he 
can  determine  that  the  conditions  of  the  contract  have  been 
broken,  surely  he  can  also  determine  that  they  have  not  been 
broken." 

In  our  opinion  there  is  nothing  in  this  doctrine  that  affords 
support  to  the  proposition  that  an  agent  who  has  not  the  power 
to  make  the  contract  of  insurance  can  bind  the  company  by 
his  contract  to  an  indefinite  postponement  of  the  payment  of  a 
renewal  premium,  and  keep  the  policy  in  force  in  contraven- 
tion of  its  provisions.  In  Bouton  v.  The  American  Mutual 
Life  Insurance  Company,  25  Conn.  542,  the  premium  was 
actual W  paid  to  the  agent,  though  after  the  day  it  fell  due.  It 
was  held  that  though  the  agent  had  power  to  make  the  con- 
tract of  insurance,  and  had  power  to  receive  the  premium  when 
due,  he  had  no  power,  without  an  express  authorization,  to  bind 
the  company  by  receiving  it  after  it  was  due.  Substantially 
the  same  doctrine  was  held  by  implication  in  Insurance  Com- 
pany v.  Norton,  96  U.  S.  234.  In  that  case  a  recovery  was 
allowed  where  the  agent  had  extended  the  time  of  payment  of 
premium,  but  the  right  of  recovery  was  made  to  turn  upon  the 
ground  that  the  jurj^  was  justified  in  inferring  from  the  prac- 
tice of  the  company  an  express  authorization  of  the  agent  to 
extend  the  time  of  payment.  There  was  no  pretense  that  the 
agent  by  virtue  of  his  power  to  make  the  contract  of  insurance 
and  collect  premiums  could  extend  the  time  of  payment.  It  is 
not  uncommon,  we  think,  for  agents  to  keep  a  policy  in  force 
after  a  renewal  premium  becomes  due,  without  actual  payment 
by  the  assured.  The  agent  sometimes  credits  the  assured  or 
issues  a  receipt  to  him  without  payment  by  him,  the  under- 
standing being  that  the  agent  becomes  personally  liable  to  the 
company,  and  the  assured  to  the  agent.  In  such  case  as 
between  the  assured  and  the  company,  the  premium  is  regarded 
as  paid.     See  Flanders  on  Insurance,  page  164,  and  cases  cited. 


500  Insurance  :    Firk,   Life,   Marine.  o.  xvii. 

There  is  a  class  of  cases  where  a  receipt  of  premium  by  an 
agent  paid  when  due  has  been  held  to  be  a  waiver  of  a  forfeit- 
ure incurred  by  a  violation  of  a  condition  of  the  policy.  See 
Walsh  V.  ^tna  Life  Insurance  Comjpany^  30  Iowa,  133,  and 
cases  cited.  But  where  an  agent  who  is  authorized  to  receive 
premiums  receives  a  premium  paid  when  due,  he  is  acting 
within  the  scope  of  his  general  authority.  The  assured  has  a 
right  to  suppose  that  the  payment  is  valid  ;  that  it  becomes  a 
payment  to  the  company  ;  and  that  the  company  by  receiving 
it,  if  it  receives  it  with  knowledge  of  the  forfeiture,  waives  the 
forfeiture.  We  have  been  unable  to  discover  any  rule  in  the 
law  of  insurance  which  would  justify  us  in  holding  that  an 
agent  can  bind  the  company  by  his  consent  to  a  postponement 
of  a  payment  of  a  renewal  premium,  and  keep  a  policy  in 
force  contrary  to  its  provisions,  unless  he  is  expressly  author- 
ized to  do  so. 

It  has  been  suggested  that  Kennedy's  authority  to  receive 
payment  of  premiums  should  be  deemed  to  include  the  au- 
thority to  bind  the  company  to  carry  the  risk  without  payment, 
because  it  might  be  for  the  interest  of  the  company  to  do  so. 
But  authority  to  an  agent  to  do  one  thing  does  not  include,  by 
implication,  an  authority  to  do  another  thing,  merely  because 
it  might  be  for  the  interest  of  the  principal  to  do  the  other 
thing.  An  agent  has  implied  authority  to  employ  the  usual 
and  necessary  means  to  accomplish  what  he  is  expressly  author- 
ized to  do.  In  the  case  at  bar  the  carrying  of  the  risk  without 
payment  of  the  premium  was  not  necessary  to  enable  the  com- 
pany to  collect  the  premium ;  that  was  collectible  without  any 
new  contract  or  consideration.  In  no  view,  then,  did  Kennedy 
have  the  implied  power  to  make  the  contract  relied  upon. 

In  our  opinion  the  rule  contended  for  by  plaintiff  would 
have  a  tendency  to  impair  the  value  of  all  insurance,  both  fire 
and  life.  If  insurance  agents  can  grant  a  valid  extension  of 
the  payment  of  renewal  premiums  for  a  few  months,  as  in  this 
case,  while  the  risk  continues,  they  can  grant  such  an  exten- 
sion for  a  few  years,  or  such  length  of  time  as  the  policy  can 
be  renewed.  No  company  under  such  rule  would  be  safe. 
Liabilities  would  constantly  tend  to  become  disproportionate 
to  available  resources.  The  interests  bound  up  in  insurance 
are  too  important  to  be  thus  jeopardized 


0.  XVII.  Critohett  v.  The  American  Ins.  Co.  501 

The  foregoing  considerations  dispose  of  the  case  without 
regard  to  the  fact  that  the  loss  occurred  one  day  after  the 
alleged  extension  had  expired.  The  evidence  was  not  such  as 
to  justify  the  mstruction  given,  nor  the  verdict  rendered. 

Reversed. 

Beok,  J.  (dissenting). — The  policy  in  the  case  insured  the 
property  for  five  years,  the  term  to  end  November  12,  1880. 
The  premiums  were  payable  annually,  the  first  being  paid  when 
the  policy  was  issued,  and  the  others  secured  by  a  promissory 
note  payable  in  installments  of  equal  suras  on  the  twelfth  day 
of  November  of  each  subsequent  year.  The  whole  of  the  condi- 
tion of  the  policy  touching  the  effect  of  non-payment  of  these 
installments  is  not  set  out  in  the  opinion  of  the  majority  of  the 
court.  The  part  omitted  follows  what  is  quoted  in  that  opiu' 
ion.     I  here  present  it : 

"  When  a  promissory  note  is  given  by  the  assured  for  the 
cash  premium  it  shall  be  considered  a  payment  of  such  pre- 
mium, provided  such  note  is  paid  at  or  before  maturity,  but  if 
such  note,  or  any  part  thereof,  shall  remain  unpaid  and  past  due 
more  than  thirty  days  at  the  time  of  any  loss  or  damage,  then 
this  company  shall  not  be  liable  to  pay  such  loss  or  damages 
happening  during  such  default,  and  no  attempt  to  collect  such 
note  or  any  installment  of  premium  upon  the  installment  note 
aforesaid,  whether  by  legal  process  or  otherwise,  shall  be 
deemed  a  waiver  of  any  of  the  conditions  of  this  policy,  or 
have  the  effect  to  renew  the  policy  ;  but  upon  payment  by  the 
assured  of  the  full  amount  of  such  note  or  installment,  as  the 
case  may  be,  and  all  cost  that  may  have  accrued,  then  this 
policy  shall  be  in  force  as  to  losses  happening  thereafter,  un- 
less inoperative  or  void  from  some  other  cause." 

The  agent  who,  as  plaintiff  claims,  extended  the  time  of 
payment,  was  expressly  empowered  by  the  defendant  to  collect 
and  remit  the  premium  due  upon  notes  of  the  kind  given  by 
plaintiff. 

The  case  presents  this  state  of  facts :  The  policy  was  an  ex- 
isting contract  at  the  time  of  the  destruction  of  plaintiff's  prop- 
erty. But  on  account  of  the  failure  of  plaintiff  to  pay  an  in- 
stallment of  the  note  which  had  fallen  due,  the  contract  could 
not  be  enforced  against  defendant  if  the  breach  of  the  condi- 


50^  Insurance  :   Fire,  Life,  Marine.  o.  xrii. 

tion  were  interposed  as  a  defense.  The  contract  had  not 
ceased  to  exist ;  it  was  binding  upon  the  parties,  and  defendant 
would  become  again  hable  thereon  upon  payment  of  the  pre- 
miums. The  case  does  not,  therefore,  require  us  to  determine 
whether  the  accent  was  authorized  to  enter  into  a  contract  of 
insurance.  It  is  not  claimed  that  his  acts  had  that  effect ;  nor, 
indeed,  did  the  agent,  in  the  act  of  giving  plaintiff  time, upon 
his  note,  make  any  contract  for  the  company.  The  whole  con- 
tract between  the  parties  is  embodied  in  the  policy.  But  by 
extending  the  time  of  payment,  the  agent  dispensed  with  the 
strict  performance  of  the  contract  of  the  plaintiff  to  pay  the 
premium  on  the  day  stipulated.  The  opinion  of  the  majority 
of  the  court,  I  understand,  concedes  that  if  the  agent  did  ex- 
tend the  time  of  payment,  and  had  authority  to  do  so,  his  act 
would  operate  as  a  dispensation  of  the  condition  of  the  policy 
and  operate  as  a  waiver  of  the  forfeiture  resulting  from  the 
non-payment.  The  only  question,  then,  to  be  determined  in- 
volves the  power  of  the  agent  to  make  an  arrangement  with 
plaintiff  that  he  should  have  further  time  for  the  payment  of 
the  installment  then  due  or  about  to  fall  due.  • 

The  agent  was  authorized  to  collect  the  premiums.  It  can- 
not be  doubted  that  if  the  plaintiff  had  paid  to  the  agent  the 
premium  after  default,  the  policy  would  have  again  attached. 
The  agent  could  have  enforced  the  payment  under  the  terms 
of  the  policy.  Thus  far  he  was  clothed  with  authority,  upon 
the  exercise  of  which,  at  his  discretion,  depended  the  binding 
force  of  the  policy. 

His  authority  to  collect  the  premium  could  be  exercised  in 
such  a  manner  and  at  such  times  as  the  interest  of  the  defend- 
ant determined  by  the  agent  required.  Surely,  the  authority 
to  collect  the  premium  was  not  so  limited  that  it  could  not 
have  been  exercised  after  default  by  plaintiff.  It  follows  that 
the  agent,  before  default,  could  arrange  with  the  plaintiff  to 
extend  the  time  in  the  exercise  of  his  authority  to  collect,  or  in 
other  words,  could  extend  the  time  for  payment. 

It  is  not  necessary  to  hold  that  the  agent  had  authority  to 
enter  into  a  contract  for  the  extension  of  the  time  upon  the 
note.  This  would  require  authority  to  make  a  new  contract 
under  which  the  old  contract  would  be  modified.  But  the 
extension  of  indulgence  to  the  plaintiff  under  an  agreement 


o.  XVII.  Critchett  v.  The  Amkuican  In8.  Co.  503 

that  the  insured  shall  not  be  prejudiced  by  delay  is  quite  a 
different  thinfr. 

I  Avill  illustrate  this  point  by  a  supposed  case.  A  enters 
into  a  contract  for  the  sale  of  lands  to  B,  payment  to  be  made 
upon  a  specified  day,  the  time  of  payment  being  of  the  essence 
of  the  contract.  The  note  given  by  B  to  secure  the  purchase 
money  is  placed  in  the  hands  of  C  for  collection,  who  agrees 
with  B  that  indulgence  shall  be  extended  for  a  time  agreed 
upon.  In  such  a  case  the  condition  as  to  time  is  waived. 
The  agent's  power  to  collect  the  money  was  exercised  in  grant- 
ing indulgence.  I  know  of  no  reason  why  the  same  doctrine 
should  not  apply  to  policies  of  insurance.  It  is  based  upon 
the  plainest  reasons.  Parties  to  a  contract  should  not  be  en- 
abled to  lay  ambuscades  and  pitfalls  for  one  another;  they 
should  not,  by  professions  of  kindness  and  indulgence,  induce 
the  violation  of  the  contract,  and  then  take  advantage  of  the 
default. 

The  agent  of  defendant  in  this  case  was  authorized  to  col- 
lect the  premium ;  there  was  no  limitation  upon  this  authority. 
He,  therefore,  could,  in  the  exercise  of  his  authority,  do  all  acts 
that  could  have  been  done  by  his  principal  in  collecting  the 
premium.  He  could  grant  indulgence  and  delay  in  the  exer- 
cise of  his  authority. 

As  I  have  said,  the  agent  made  no  new  contract ;  his  act  in 
granting  indulgence  does  not  demand  the  exercise  of  authority 
to  make  a  new  contract. 

My  brothers  in  the  foregoing  opinion  express  the  thought 
that  the  agent  could  not  grant  indulgence,  unless  he  had  the 
authority  to  enter  into  a  contract  of  insurance.  They  think 
that  the  time  for  the  payment  of  premiums  can  only  be  ex- 
tended by  insurance  agents  when  they  deliver  the  policy,  or 
do  some  other  act  required  in  the  execution  of  the  contract. 
That  agents  possessing  such  authority,  and  under  such  circum- 
stances may  waive  conditions  as  to  the  time  of  payment,  does 
not  support  the  conclusion  that  indulgence,  or,  if  you  please, 
extension  of  time,  may  not  be  granted  by  an  agent  employed 
to  collect  premiums  after  the  policy  has  attached.  In  my 
opinion  the  time  at  which  an  agent  may  perform  acts  under 
his  authority,  if  not  prescribed  by  the  principal,  rests  in  his 
discretion,  to  be  exercised  for  the  interest  of  the  principal.    The 


604  Insurance  :    Fire,  Life,   Marine.  c.  xvn. 

agent  of  defendant  was  authorized  to  collect  the  premium  ;  he 
determined  that  he  would  not  collect  it,  or  demand  its  pay- 
ment, until  plaintiff  received  his  pension,  and  so  informed  plain- 
tiff, who,  relying  upon  the  arrangement,  did  not  pay  the  pre- ' 
mium  before  his  house  was  burned.  As  the  act  of  the  agent 
in  extending  the  time  of  payment  was  done  in  the  exercise  of 
authority  to  collect  the  premium,  the  defendant  is  estopped  to 
enforce  the  forfeiture  for  the  non-payment  of  the  installment. 

The  conclusion  I  reach,  that  the  payment  of  the  installment 
on  the  day  it  fell  due  was  dispensed  with,  and  the  forfeiture 
waived  by  the  act  of  the  agent  in  extending  the  time  of  pay- 
ment, is  supported  by  the  following  authorities :  Viele  v.  Ger- 
mania  Insurance  Company,  26  Iowa,  9  ;  Walsh  v.  The  ^tna 
Life  Insurance  Company,  30  id.  133 ;  Young  &  Co.  v.  Hart- 
ford Fire  Insurance  Company,  45  id.  377 ;  Insurance  Comr 
pany  v.  Norton,  96  U.  S.  234 ;  Mississippi  Valley  Life  Insurance 
Company  v.  Neyland,  9  Bush.  430  ;  Sheldon  v.  Connecticut 
Mutual  Life  Insurance  Company,  25  Conn.  20 7-;  Bouton  v. 
American  Mutual  Life  Insurance  Company,  25  Conn.  542 ; 
Trustees  of  Baptist  Church  v.  Brooklyn  Insurance  Company, 
19  N.  Y.  305  ;  Bowman  v.  Agricultural  Insurance  Company 
59  N.  Y.  521 ;  Halloch  v.  Commercial  Insurance  Company,  2 
Dutcher,  268. 

In  my  opinion  the  judgment  of  the  District  Court  ought  to 
be  affirmed. 

New  York  Court  of  Appeals,  1871. 
MALLORY   V.  TRAVELERS   INS.  CO. 

(47  N.  Y.  52.) 
I^'esumption  that  death  by  drowning  is  by  accident  rather  than  by  suicide. 

Appeal  from  judgment  of  the  General  Term  of  the  second 
judicial  district,  affirming  a  judgment  entered  upon  verdict  in 
favor  of  plaintiff. 

This  action  is  brought  upon  an  accident  policy  of  insurance 
issued  upon  the  life  of  W.  S.  Mai  lory  for  the  sum  of  $2,000, 
for  the  benefit  of  and  made  payable  to  plaintiff.  By  the  policy 
the  defendant  agreed  to  pay  the  sum  insured,  and  '•  within 
ninety  days  after  sufficient  proof  that  the  insured,  at  any  time 


0.  XVII.  Mallory  v.  Travelers  Ins.  Co.  505 

within  the  term  of  this  policy,  shall  have  sustained  personal 
injury  caused  by  an}^  accident  within  the  meaning  of  this  policy 
and  the  conditions  hereunto  annexed,  and  such  injuries  shall 
occasion  death  witiiin  three  months  after  the  happening  there- 
of." "  And  if  the  insured  shall  sustain  any  personal  injury 
which  shall  not  be  fatal,  but  which  shall  absolutely  and  totally 
disable  him  from  the  prosecution  of  business,  then  on  satisfac- 
tory proof  of  such  injur}',  compensation  shall  be  paid  to  him," 
etc.  "  Provided  always  that  no  claim  shall  be  made  under  this 
policy  by  the  said  insured  in  respect  of  any  injury,  unless  the 
same  shall  be  caused  by  some  outward  and  visible  means,  of 
which  proof  satisfactory  to  the  company  shall  be  furnished," 
etc. 

Grover,  J. — The  question  whether  the  plaintiff  had  an  in- 
surable interest  in  the  life  of  the  deceased  does  not  arise  in 
this  case.  The  insurance  was  upon  the  life  of  W.  S.  Mallory. 
The  policy  was  procured  by  him,  and  he  paid  the  premium 
therefor,  and  made  the  loss  payable  to  the  plaintiff  (his  daughter) 
or  legal  representatives.  This,  in  effect,  was  a  policy  procured 
by  him  upon  his  own  life,  and  an  assignment  thereof  to  the 
plaintiff.  Grosvenor  v.  The  Atlantic  Fire  Ins.  Co..,  lY  N.  Y. 
391  ;  Rawls  v.  American  Mutual  Ins.  Co.,  27  N".  Y.  282. 
There  was  no  error  in  denying  the  defendant's  motion  for  a 
nonsuit.  No  ground  for  such  motion  was  stated,  and  in  such 
a  case  the  well-settled  rule  is,  that  there  is  no  error  committed 
by  den3nng  it,  although  there  may  be  a  defect  in  the  plaintiff's 
proof,  if  the  defect  was  such  that  it  might  have  been  supplied 
if  pointed  out  upon  the  motion.  But  there  was  no  such  defect. 
The  proof  showed  that  the  deceased  had  been  staying  at  his 
brother's  at  Bridgeport,  Conn.,  for  about  a  week  ;  that  he  left 
the  house  on  Sunday,  and  was  last  seen  alive  on  that  day, 
walkino:  toward  a  railroad  brido^e  over  a  culvert,  across  a  stream 
emptying  into  the  sound,  where  the  waters  of  the  sound  set, 
to  some  extent,  into  the  land  and  up  the  stream  at  high  tide  ; 
that  this  bridge  was  used  by  pedestrians  to  cross  the  stream  to 
a  considerable  extent ;  that  the  body  of  the  deceased  was 
found  in  the  pond  not  far  from  the  bridge,  in  a  few  days 
thereafter.  The  policy  was  one  embracing  cases  only  where 
the  death  was  caused  by  an  injury  received  from  an  accident. 


606  Insurance  :   Fike,  Life,  Marine.  c.  xtii. 

From  the  facts  above  it  appeared  either  that  the  death  was 
caused  by  such  an  injury  or  the  suicidal  act  of  the  deceased  ; 
but  the  presumption  is  against  the  latter.  It  is  contrary  to 
the  general  conduct  of  mankind  ;  it  shows  gross  moral  turpi- 
tude in  a  sane  person.  That  it  resulted  from  the  former  cause 
was  to  some  extent  rendered  more  probable  by  the  wound  upon 
the  head  of  the  deceased,  and  the  break  in  the  corresponding 
part  of  his  hat.  Although  this  wound  might  have  been  made 
after  the  deceased  was  in  the  water,  or  while  falling  in,  yet  it 
was  for  the  jury  to  say  how  it  was  caused,  and  to  determine 
its  effect  upon  the  question  whether  the  death  was  the  result 
of  an  accidental  injury,  or  whether  the  deceased  had  destroyed 
his  own  life.  The  court  did  not  err,  in  charging  the  jury,  that 
the  conversation  between  the  president  of  the  company  and 
the  deceased  had  no  bearing  upon  this  particular  application. 
It  was  proved  that  the  deceased  at  the  time  of  death  was,  and 
for  some  time  previous  to  procuring  the  policy  had  been,  a  can- 
vasser for  applications  for  insurance  with  the  defendant  ;  that 
in  an  interview  with  the  president,  the  deceased  remarked  that 
he  could  procure  a  great  number  of  applications  in  Newark : 
to  which  the  president  in  substance  replied,  that  he  must  be 
cautious,  as  the  company  did  not  wish  to  insure  insane  per- 
sons, or  persons  of  habits  of  intoxication.  This  evidence  was 
relied  upon  by  the  defendant  to  avoid  the  policy,  in  connection 
with  the  facts  proved,  that  the  deceased,  twenty  years  before 
making  the  application,  had  a  severe  fever,  during  which  he 
was  more  or  less  insane,  but  that  after  recovering  therefrom 
he  was  sane  until  three  or  four  years  before  that  time,  when  he 
was  insane,  from  what  cause  did  not  appear,  and  was  placed  for 
about  three  months  in  a  retreat  for  such  persons,  when  he  was 
discharged  cured  therefrom,  from  which  time  to  his  death  he 
more  or  less  attended  to  business,  was  sane,  or  at  most  the  evi- 
dence of  a  want  of  sanity  was  so  slight  during  any  portion  of 
this  period  as  hardly  warranted  the  submission  of  any  question 
thereon  to  the  jury  ;  that  the  deceased  did  not  state  to  the 
company,  upon  making  apphcation  for  the  policy,  that  he  evei- 
had  been  insane,  but  did  state  there  were  no  circumstances 
which  rendered  him  peculiarly  liable  to  accident.  This  gen- 
eral conversation  with  the  president  some  time  before  the 
application  had  no  tendency  to  show  a  fraudulent  concealment 


o.  XVII.  Mallory  v.  Travelers  Ins.  Co.  607 

of  material  facts  upon  making  the  application.  There  was  nc 
evidence  tending  to  show  that  he  was  then  insane,  or  that  he 
had  been  for  some  time  before,  and  this  conversation  did  not 
convey  to  his  mind  the  idea  that  the  company  regarded  those 
that  a  long  time  before  had  been  insane,  as  peculiarly  liable  to  ac- 
cidents. The  construction  put  upon  the  contract  in  the  charge 
was  correct.  That  construction  was,  that  the  terms  outward 
and  visible  means  applied  only  to  injuries  not  causing  death  in 
three  months,  but  to  such  only  as  entitled  the  deceased  to  cer- 
tain sums  from  the  company  during  their  continuance,  as  pro- 
vided by  the  policy.  The  part  of  the  charge  to  the  effect  that 
if  the  wound  led  to  the  cause  of  his  death,  then  it  would  be  an 
accidental  death,  could  have  been  understood  only  in  the  sense 
of  the  wound  being  produced  by  an  accident,  but  that  this,  not 
causing  death,  did  cause  him  to  fall  into  the  water,  where  he 
died  from  drowning,  then  the  death  was  accidental ;  so  under- 
stood, it  was  entirely  correct.  The  judge  was  right  in  charg- 
ing that,  if  the  deceased  did  not  conceal  any  fact  which,  in  his 
own  mind,  was  material  in  making  the  application,  the  policy 
was  not  void.  Rawls  v.  The  American  Mutual  Life  Ins.  Co., 
27  N.  Y.  282 ;  Van  Linde?iau  v.  Deshorough,  15  Eng.  C.  L. 
290  ;  and  Valton  v.  National  Fund  Life  Lis.  Co.,  20  IST.  Y. 
32.  Cases  cited  b}^  counsel  were  cases  where  false  answers 
were  given  to  inquiries  made,  and  have  no  application  to  this 
case.  The  counsel  was  mistaken  in  his  exception  to  the 
charge,  that  if  the  deceased  was  insane  so  that  he  could  not 
know  right  from  wrong,  that  his  death  in  such  a  condition  was 
an  accident,  which  would  entitle  him  to  recover.  The  judge 
did  not  so  charge.  The  judge  did  charge  that  if  his  con- 
dition at  the  time  was  such  that  he  could  not  distinguish 
right  from  wrong,  if  it  was  such  that  he  could  not  be 
held  in  his  own  mind  to  know  that  he  was  doing  an  act 
which  would  produce  death,  then  he  was  an  involuntary 
agent,  and  the  result  of  that  involuntary  act  producing  death 
was  an  accident.  This  part  of  the  charge  was  not  excepted  to. 
Hence  no  question  arises  thereon  for  review  by  this  court.  The 
defendant  can  sustain  no  injury  from  the  want  of  a  proper  ex- 
ception, even  if  right  in  its  law,  for  the  reason  that  there  was 
no  evidence  tending  to  show  that  the  deceased  did  not  know 
that  keeping  his  head  under  water  for  a  sufficient  time  would 


508  Insurance  :    Fire,  Life.  Marine.  o.  xvii. 

cause  his  death.     It  was  wholly  immaterial  whether  Lawton 

ever  told  Johnson  that  the  deceased  was  insane,  or  when   he 

told  him  so.      The   defendant  could  not  have  sustained  any 

injury  from  this  testimony.     The  judgment  appealed  must  be 

aflBrmed,  with  costs. 

All  concur. 

Judgment  affirmed- 

New  York  Court  of  Appeals,  1884. 
MUKRAY  V.  NEW   YORK  LIFE  INS.  CO. 

(96  N.  Y.  614.) 
Exemption  from  Uahility  if  death  in  consequence  of  violation  of  law. 

Andrews,  J. — The  policies  upon  the  life  of  Wisner  Murray 
each  contain  a  condition  that,  if  the  insured  "•  shall  die  in,  or  in 
consequence  of,  a  duel,  or  of  the  violation  of  the  laws  of  any 
nation,  State,  or  province,"  the  policy  shall  be  void.  The 
assured  died  from  a  pistol  shot  from  a  pistol  in  the  hands  of 
one  Berdell,  upon  whom  the  deceased  and  his  brother  had 
committed  a  violent  assault,  and  the  defense  is  based  upon  this 
condition  in  the  policy.  It  is  an  undisputed  fact  that  the 
brothers,  acting  in  concert,  planned  the  assault  upon  Berdell. 
They  stationed  themselves  in  the  waiting-room  of  the  station, 
awaiting  his  arrival,  and,  when  he  entered  the  room,  Spencer 
Murray  seized  him  by  the  arms  from  behind  and  held  him. 
while  his  brother,  Wisner  Murray,  standing  in  front,  beat  him 
over  the  head  and  face  with  a  raw-hide,  striking  from  ten  to 
twenty  blows,  inflicting  severe  and  painful  wounds  from  which 
the  blood  flowed  profusely,  covering  his  face  and  clothing. 
The  assault  was  a  brutal  one,  and,  so  far  as  appears,  without 
provocation.  Berdell  testified  that  in  the  struggle  to  escape 
from  Spencer  Murray  his  hand  was  involuntarily  brought  into 
contact  with  his  hip-pocket,  containing  a  pistol.  He  drew  it 
from  his  pocket,  and  it  appears  that  Wisner  Murray,  seeing  the 
pistol,  started  toward  the  lunch-counter,  keeping  his  face  toward 
Berdell  and  calling  on  his  brother  to  "  hold  him  and  not  to  let 
him  shoot."  Wisner  Murray  jumped  over  the  lunch-counter, 
and,  as  he  was  passing  through  a  door  into  another  room,  the 
pistol  in  the  hands  of  Berdell  was  discharged,  the  ball  hitting 
the  assured  in  the  forehead,  causing  his  death. 


0.  XVII.  Murray  v.  New  York  Life  Ins.  Co.  609 

Berdell,  who  was  called  as  a  witness  by  the  defendant,  tes- 
tified, in  substance,  that  the  firing  of  the  pistol  was  accidental, 
and  was  caused  by  the  sudden  jerking  of  his  arm  by  Spencer 
Murray,  who  was  still  holding  him,  and  that  he  had  no  inten- 
tion of  tiring  at  the  deceased.  It  is  established  by  the  great 
preponderance  of  testimony  that,  until  after  the  pistol  was 
fired,  Berdell  was  in  the  grasp  of  Spencer  Murray,  and  was 
struggling  to  release  himself.  Berdell  also  testified  that  the 
deceased,  during  the  time  he  was  retreating,  had  a  pistol  which 
he  pointed  at  the  witness  as  if  aiming  at  him.  He  is  confirmed 
as  to  the  deceased  having  a  pistol  by  another  witness,  and  a 
pistol  was  found,  after  the  affray,  on  the  floor  near  where  the 
deceased  fell,  a  distance  of  about  thirty  feet  from  the  place 
where  Berdell  was  when  the  shot  was  fired.  The  witnesses 
differ  as  to  the  time  which  ela[)sed  between  the  commencement 
of  the  affray  and  the  firing  of  the  pistol,  the  highest  estimate 
given  by  any  witness  being  thirty  seconds. 

It  is  not  disputed  that  the  assault  made  upon  Berdell  was  a 
violation  of  law.  But  it  is  contended  that  as,  according  to  the 
evidence  of  Berdell,  the  firing  was  accidental  and  not  inten- 
tional, and  as  it  also  appears  that  it  happened  after  the  assured 
had  abandoned  the  combat,  his  death  was  "  not  in,  or  in  con- 
sequence of,  a  violation  of  law,"  and  was  not,  therefore,  a 
death  excepted  from  the  operation  of  the  policy.  The  argu- 
ment is  that  death  under  such  circumstances,  from  an  accidental 
shooting,  cannot,  in  a  legal  sense,  be  attributed  to  the  violation 
of  law  which  preceded  it,  so  as  to  bring  it  within  the  condition 
of  the  policy.  There  must,  no  doubt,  be  a  relation  between  the 
act  Cciusing;  the  death  and  the  violation  of  law  to  avoid  the 
policy.  In  the  case  of  Bradley  v.  Mutual  Benefit  Life  Insur- 
ance Company^  45  N.  Y.  422,  involving  the  construction  of  a 
similar  clause  in  a  life  policy,  the  court  said :  "  It  seems  to  be 
clear  that  a  relation  must  exist  between  the  violation  of  law 
and  the  death  to  make  good  the  defense  ;  that  the  death  must 
have  been  caused  by  the  violation  of  law." 

It  may  be  that  the  proviso  in  the  policy  was  primarily 
intended  to  exempt  the  company  from  the  hazard  of  a  death 
from  violence  to  which  persons  engaged  in  the  execution  of 
criminal  acts  are  exposed,  and  especially  where  the  unlawful 
or  criminal  act  is  such  as  is  likely  to  be  met  by  forcible  resist- 


610  Insurance  :   Fire,  Life,  Marine.  o.  xtii. 

ance.  It  is  plain  that  a  homicide  committed  in  self-defense 
would  be  a  death  within  the  condition  ;  so,  also,  a  death  at  the 
hands  of  justice  in  punishment  for  crime.  The  death  in  these 
cases  would  be  the  direct  and  legitimate  result  of  the  criminal 
act.  Another  case,  a  little  further  removed  from  the  violation 
of  law  as  its  cause,  would  be  one  where  a  party  assailed,  in  the 
heat  of  passion  engendered  by  the  act  of  the  assured,  on  the 
moment  takes  the  life  of  the  aggressor,  although  the  provoca- 
tion might  not  be  a  legal  justification  of  the  homicide.  Such  a 
death,  we  conceive,  might  be  within  the  condition,  depending 
upon  circumstances.  If  the  violation  of  law  in  which  the 
deceased  was  engaged  was  trivial,  although  calculated  to  some 
extent  to  excite  opposition  or  resistance,  but  the  taking  of  life 
was  a  result  which  no  reasonable  man  could  have  contemplated 
as  likely  to  follow  from  the  unlawful  act,  there  would  be  no 
such  relation  between  the  act  and  the  death  that  the  former 
could  be  said  to  be  the  cause  of  the  latter.  But  if,  on  the  other 
hand,  the  party  killed  was  engaged  in  committing  a  violent 
assault,  the  natural  result  of  which  would  be  to  arouse  the  pas- 
sions and  excite  the  anger  of  the  party  assailed,  and  in  the  heat 
of  passion  he  killed  his  assailant,  the  death  would,  we  think,  be 
tiie  result  of  the  unlawful  act  within  the  meaning  of  the  policy, 
although  the  party  causing  it  exceeded  the  bounds  of  lawful 
resistance.  As  between  the  compan}^  and  the  assured,  his  vio- 
lation of  law  ought  justly  to  be  treated  as  the  cause  of  the 
death,  because  the  deceased  must  be  assumed  to  have  known 
the  danger  he  incurred,  and  that  a  party  resisting  an  assault 
under  such  circumstances,  and  whose  anger  is  naturally  excited, 
does  not  mark  with  exactness  the  line  which  separates  lawful 
defense  from  excessive  and  unjustifiable  force. 

We  have  so  far  had  in  view  cases  where  the  death  of  a 
person  insured  was  the  result  of  the  intentional  act  of  another, 
or  of  the  law.  But  while  it  is  probable,  as  we  have  said,  that 
cases  of  this  kind  were  primarily  in  the  contemplation  of  the 
parties  to  the  contract,  the  words  of  the  condition  are  too 
broad  to  permit  them  to  be  confined  to  this  narrow  and  rigid 
limitation.  The  proviso  clearly  exempts  the  company  from 
all  risks  of  life  which  attend  the  violation  of  law,  which  are 
the  natural  and  reasonable  concomitants  of  the  transaction. 
Prize-fignting  is  prohibited  by  law,  and  is  attended  witli  some 


c.  XVII.  Murray  v.  Xkw   York  Lifk  Ins.  Co.  511 

danger.  Suppose  in  sncli  a  friendly  contest,  by  mishap  one  of 
the  combatants  strikes  a  blow  wliich  causes  the  death  of  the 
other.  Would  a  death  under  such  circumstances  be  a  death  in 
the  violation  of  law  within  the  policy,  although  there  was  no 
intention  to  kill  ?  However  this  might  be  answered,  we  think 
it  is  clear  that  there  may  be  a  death  in  violation  of  law  within 
the  meaning  of  the  policy,  although  not  intentionally  inflicted, 
and  although  it  was  not  occasioned  by  the  act  of  another.  A 
burglar  who,  in  consequence  of  a  misstep,  or  to  escape  detec- 
tion, falls  or  jumps  from  the  roof  of  a  house  which  he  is 
attempting  to  enter,  and  is  killed,  dies  in  violation  of  law  as 
plainly  as  if  he  had  been  shot  by  the  owner  in  defense  of  his 
dwelling.  In  the  former  as  in  the  latter  case,  the  death  results 
from  the  criminal  act,  within  the  policy,  as  a  natural  and  rea- 
sonable consequence,  because,  although  the  immediate  cause  of 
the  death  was  the  fall,  yet  the  exposure  to  the  danger  was 
encountered  in  the  prosecution  of  the  criminal  purpose.  An- 
other case  may  be  stated,  of  which  there  may  perhaps  be 
more  doubt.  Suppose  the  assured  in  this  case,  instead  of  hav- 
ing been  killed  by  the  pistol,  had,  in  the  struggle  with  Berdell, 
ruptured  a  blood-vessel,  or,  being  predisposed  to  heart  disease, 
it  had  been  brought  on  by  the  excitement  of  the  affray,  and  he 
had  died  from  either  of  these  causes  in  the  midst  of  the  strug:- 
gle.  Death  from  a  rupture  of  a  blood-vessel,  or  from  disease 
of  the  heart,  occurring  independently  of  any  violation  of  law, 
would  be  covered  by  the  policy.  The  company  assume  the 
risk  of  death  from  these  causes  under  ordinary  circumstances. 
But  do  they  assume  such  risk  when  the  immediate,  exciting 
cause  of  the  death  is  a  struggle  originating  in  a  criminal 
assault  in  which  the  deceased  was  engaged  at  the  time  ?  To 
exempt  the  company,  must  the  death  result  from  some  peculiar 
and  special  risk  connected  with  the  commission  of  crime  ?  It 
seems  to  us  not,  and  that  it  is  sufficient  to  bring  a  case  within 
the  condition,  if  there  is  such  a  relation  between  the  act  and 
the  death  that  the  latter  would  not  have  occurred  at  the  time 
if  the  deceased  had  not  been  engaged  in  the  violation  of  law. 

In  the  case  before  us  it  is  said  that  the  shooting  was  acci- 
dental and  not  voluntary  or  intentional,  and  consequently  was 
not  a  death,  in  or  in  consequence  of  a  violation  of  law.  "What 
incidents  would  attend  the  assault  by  the  Murrays  could  not 


612  Insurance:   Fire,  Life,  Marine.  o.  xvn. 

be  foreseen.  They  probably  did  not  know  that  Berdell  had 
a  pistol,  and  if  they  had  known  it,  they  could  not  have  antici- 
pated that  it  would  be  discharged  in  the  manner  stated  by  him. 
But  they  took  the  risk  of  his  resistance  to  any  extremity. 
They  took  the  risk  of  an  injury  which  might  happen  to  them 
in  consequence  of  his  handling  a  deadly  weapon,  whether  such 
injury  was  intentional  or  accidental.  The  case  is  to  be  consid- 
ered under  the  actually  existing  circumstances  of  the  assailants 
and  assailed,  and  if  the  killing  under  these  circumstances  was 
not  an  unnatural  result  of  the  attack,  the  case  is  within  the 
condition.  Assuming  that  Berdell's  statement  that  the  shoot- 
ing was  unintentional  was  binding  on  the  jury,  and  that  the 
killing  was  accidental,  yet  the  accident  was  the  result  of  the 
struggle  of  Berdell  to  free  himself  from  the  grasp  of  Spencer 
Murray,  antl  the  jerking  of  his  arm  by  the  latter.  The  acci- 
dent, so  called,  was  caused  by  the  assault,  and  the  risk  of 
injury  from  the  discharge  of  the  pistol  was  occasioned  by  the 
criminal  act  of  the  Murrays.  The  claim  that  Wisner  Murray 
had  abandoned  the  combat  before  the  firing  of  the  pistol,  if 
true,  does  not  meet  the  difficulty.  He  was  a  party  to  the 
original  encounter.  The  struggle  with  Spencer  Murra}^  was 
continuing  when  the  pistol  was  fired.  If  the  shot  had  killed 
Spencer  Murray,  and  he  had  been  the  person  insured,  there 
could,  we  think,  be  no  doubt.  It  killed  his  brother,  who  was 
unfortunately  within  its  range,  but  at  a  time  when  it  is  said  he 
was  attempting  to  escape  from  the  scene.  But  he  was  not 
relieved  from  responsibility  for  the  act  of  his  confederate  in  a 
crime  jointl}^  planned,  who  was  continuing  the  assault,  and  the 
act  of  Spencer  Murray  in  jerking  the  arm  of  Berdell,  causing 
the  explosion,  is  as  to  the  company  the  act  of  both. 

We  are  of  opinion,  assuming  as  true  to  its  full  extent  the 
statement  made  by  Berdell,  that  the  defense  was  established. 
If,  as  there  is  some  slight  evidence  to  show,  Berdell  fired  the 
pistol  after  he  had  escaped  from  Spencer  Murra}^  the  case  is 
not  changed.  At  all  events  the  jury  upon  that  theory  of  the 
case  might  well  have  found,  and  could  not  justly  have  found 
otherwise,  that  it  was  fired  by  Berdell  in  the  heat  of  passion, 
and  under  circumstances  which,  if  they  did  not  fully  justify 
him,  made  the  firing  and  the  consequent  death  a  natural  and 
reasonable  consequence  of   the   assault.     Whether,  therefore. 


o.  XVII.  Murray  v.  New  York  Life  Ins.  Co.  613 

the  firing  of  the  pistol  was  intentional  or  not,  or  whether  Wis- 
ner  Murray  had  or  had  not  abandoned  the  combat,  the  jury 
upon  the  evidence  were  justified  in  finding  as  they  did  by  the 
general  verdict,  that  the  assured  died  in,  or  in  consequence  of, 
a  violation  of  law.  This  conclusion  answers  the  points  made 
upon  the  exceptions  to  the  charge 

Judqment  affirmed. 


CHAPTKJR  XYlll. 

olaxj8e8  of  the  accident  policy. 

New  York  Court  of  Appeals,  1890. 
BACON  V.  U.  S.  MUT.  ACC.  ASSO. 

(123  N.  Y.  304.) 
Whether  a  loss  by  accident  or  by  disease. 

The  policy,  or  certificate,  was  in  general  similar  to  the 
form  of  accident  policy  given  in  the  appendix,  but  one  of  the 
stipulations  was  worded  as  follows :  "  Benefits  under  this  cer- 
tificate shall  not  extend  to  any  death  or  disability  which  may 
be  caused,  wholly  or  in  part,  by  bodily  infirmities  or  disease 
existing  prior  or  subsequent  to  the  date  of  this  certificate,  or 
by  poison  in  any  manner  or  form." 

Verdict  for  plaintiff,  affirmed  by  General  Term  Supreme 
Court. 

Peckham,  J. — I  think  the  deceased  died  from  disease  within 
the  meaning  of  the  language  used  in  the  policy  sued  upon  in 
this  action,  and  not  from  an  accident  causing  the  disease.  The 
disease  itself  was  not  caused  by  an  accident  within  the  mean- 
ing of  the  policy. 

The  case  of  Paul  v.  Trmelers  Ins.  Co.,  112  N.  Y.  472,  has 
been  cited  by  counsel  for  the  respondent  as  decisive  of  his  case. 
Upon  the  question  decided  the  case  is  conclusive,  and  we  have 
no  disposition  to  alter  our  views  as  expressed  therein.  But 
upon  the  question  of  whether  the  deceased  in  this  case  died 
from  disease,  as  above  stated,  the  case  of  Paul  is  without  the 
slightest  analogy.  In  that  case  the  deceased  came  to  his  death 
by  accidentally  inhaling  illuminating  gas.  This  gas  is  a  manu- 
factured article,  gathered  into  large  reservoirs,  and  thence  dis- 
tributed through    pipes  into  almost  every  house  in  a  city  or 


0.  XVIII.  Bacon  v.  U.  S.  Mut.  Acc.  Asso.  615 

village.  The  deceased  accidentally,  while  asleep,  inhaled  this 
gas  and  was  suffocated.  This  would  seem  to  be  a  plain  case 
of  death  from  accident,  and  it  was  found  that  the  gas  was  not 
purposely  inhaled.  The  death  being  the  result  of  accident,  it 
was  then  held  that  such  death  was  caused  by" external  and  vio- 
lent means,  within  the  meaning  of  the  policy.  This  also  seems 
})laiii  enough.  The  gas  was  external,  and  it  was  not  inhaled 
voluntarily — /.(?.,  intentionally  and  for  the  purpose  of  being 
killed  thereby.  It  might  naturally  be  said — as  in  effect  it  was — 
that  death,  as  the  result  of  accident,  imports  an  external  and 
violent  agency  as  the  cause.  There  was  no  question  in  th« 
Paul  case  that  the  deceased  came  to  his  death  through  disease: 
no  pretense  could  properly  be  made  as  to  death  from  disease 
in  such  a  case.  If  the  deceased  had  been  asleep  in  a  room  into 
which  a  large  quantity  of  water  was  poured  through  the  acci- 
dental breaking  of  a  water-main,  and  in  consequence  thereof 
he  had  been  drowned,  no  one  would  deny  that  the  death  was 
caused  by  accident,  and  was  not  the  result  of  disease,  as  that 
word  is  generally  used  among  men.  There  is  no  difference  in 
the  case  in  principle  if  the  death,  instead  of  being  caused  by 
w^ater  which  was  visible,  was  caused  by  gas  which  is  invisible. 
In  neither  case  coald  the  idea  even  suggest  itself  that  death 
was  caused  by  disease.  But  in  the  case  before  us  the  facts  are 
entirely  different. 

The  deceased  died,  as  is  said  and  as  will  be  here  conceded, 
from  malignant  pustule.  It  is  caused,  as  the  plaintiff's  witness 
testified,  by  the  infliction  upon  the  body  of  a  certain  kind  of 
animal  substance,  contact  with  diseased  or  putrid  animal  mat- 
ter ;  this  acts  by  producing,  at  the  point  of  contact  with  this 
matter,  a  papula,  something  like  a  flea  bite,  which  rapidly  be- 
comes a  vesicle,  a  blister-like  affair,  and  then  a  pustule  ;  this  is 
accompanied  by  a  great  deal  of  swelling  in  the  parts  immedi- 
ately around  it,  and  a  great  deal  of  pain  in  the  individual ;  the 
glands  in  the  vicinity  become  infiltrated  with  blood  and  pus, 
and  become  dark  red  or  even  black  in  color ;  the  neighboring 
glands  become  involved ;  then  comes,  almost  immediately  after 
or  together  with  these  signs,  a  great  prostration,  and  the  patient 
dies  in  a  short  time,  five  to  eight  days  generally,  the  extreme 
limits  being  from  twenty-four  hours  to  sixteen  days ;  he  dies 
of  exhaustion. 


616  Insurance  :   Firk,  Life,  Marine.  o.  xvni. 

As  to  the  cause  of  the  pustule,  the  witness  stated  that  the 
virus  comes  from  the  hide,  or  hair,  or  wool  of  animals  suffering 
from  this  disease  ;  from  their  flesh  sometimes,  or  it  may  come 
from  the  feathers  of  birds  that  have  been  feeding  upon  this 
peculiar  kind  of  carrion  ;  it  may  be  communicated  directly, 
that  is,  by  the  immediate  contact  of  the  individual  witli  it,  by 
his  touching  it  or  handling  it  and  then  bringing  the  matter  in 
contact  with  the  skin  or  thin  mucous  membrane  ;  or  it  may  be 
transported,  as  there  are  very  many  cases  known,  by  insects, 
flies,  mosquitoes,  that  have  been  feeding  upon  tliis,  carrying  it 
away  and  depositing  it  upon  individuals.  It  is  commonly 
known  as  malignant  pustule,  or  charbon,  or  anthrax  ;  they  are 
all  synonymous  terms.  It  has  been  called  wool-sorter's  disease, 
because  it  happens  among  people  that  handle  wools  and  hides, 
such  as  tanners,  butchers,  and  herdsmen,  and  those  people  that 
are  engaged  in  business  where  they  are  brought  in  contact  with 
that  sort  of  thing. 

In  answer  to  the  question,  "  How  rare  is  malignant  pustule  ? " 
this  same  witness  for  the  plaintiff  answered  :  "  In  the  eastern 
parts  of  this  country  it  is  pretty  rare ;  there  have  been  some 
epidemics  reported  in  America ;  in  the  eastern  part  of  Massa- 
chusetts, I  think  about  twenty  years  ago,  there  were  quite  a 
number  of  cases  among  the  hairworkers,  people  that  take  the 
hair  that  comes  from  abroad  and  make  mattresses  of  it." 

The  witness  thus  designates  the  difficulty  as  an  epidemic, 
which  word  is  so  frequently  used  in  connection  with  disease  as 
almost  to  be  synonymous  therewith.  It  was  undoubtedly  so 
used  in  this  instance  by  the  witness,  who  tims  described  malig- 
nant pustule  as  a  disease,  when  referring  to  its  frequency  in 
Massachusetts  some  years  ago.  The  word  epidemic  would 
scarcely  be  used  to  express  a  frequent  occurrence  of  accidents. 
The  witness  also  said  that  he  has  seen  it  termed  in  one  standard 
authority  as  an  acute  infectious  disease.  He  said  that  the 
special  poison  of  the  disease  has  been  found  to  be  a  particular 
kind  of  bacteria,  "  bacillus-anthrax."  The  following  question 
was  put  to  the  witness  :  "  Is  it  not  so  that  anthrax  is  an  acute, 
infectious  malady,  which  breaks  out  commonly  in  an  epizootic 
or  enzootic  manner,  and  is  not  infrequently  sporadic  in  herbivor- 
ous animals  and  swine,  and  is  transmissible  to  a  great  number 
of  other  animals,  as  well  as  to  mankind  ? "     The  answer  of 


0.  XVIII.  Baoon  v.  U.  S.  Mux.  Acc.  Asso.  51  Y 

the  witness,  after  some  fencing,  was,  "•  Yes,  I  tliink  tliat  is 
correct." 

Malignant  pustule  differs,  according  to  this  same  witness, 
from  diphthei'ia,  small-pox,  or  scarlet  fever,  in  the  single  fact 
that  this  is  a  particulai'l}^  poisonous  animal  matter,  and  it  has 
one  particular  germ  fi-om  which  it  originates,  as  small-pox  has 
another,  and  hydrophobia  another,  and  the  cause  of  the  diffi- 
culty in  each  case  is  some  form  of  bacteria,  transmissible  to 
mankind.  It  can  be  contracted  through  eating  the  flesh  of 
animals  subject  to  the  disease.  The  bacillus  is  very  small,  so 
small  that  it  may  enter  in  the  pores  of  the  skin,  and  an  abra- 
sion of  tlie  skin  is  not  necessary,  but  miglit  quicken  the  result. 
The  forming  of  the  pustule  upon  the  skin  is  the  product  of  the 
poison. 

Another  witness  for  the  plaintiff,  who  was  a  physician,  said 
that  he  understood  malignant  pustule  to  be  a  development  of 
the  particular  bacilli  in  the  system  radiating  from  the  point  of 
contact.  He  added  that  the  contagion  might  be  internal  as  well 
as  external,  taken  through  the  mouth  or  through  the  nose,  and 
it  is  generally  considered  an  acute  infectious  disease. 

Both  these  learned  gentlemen,  however,  refused,  themselves, 
to  designate  malignant  pustule  as  a  disease. 

Dr.  Harris  defined  it  as  "  a  pathological  condition  and 
succumbing  of  the  body  to  the  infliction  of  this  particular 
poison."  Dr.  Bailey  says  he  considers  it  as  a  ''  pathological 
condition  following  this  particular  inroad  of  this  particular 
kind  of  bacilli." 

We  all  know  that  "  pathology,"  as  used  generally,  means 
that  part  of  medicine  which  explains  the  nature  of  diseases, 
their  causes  and  symptoms.  A  ''  pathological  condition  "  means 
neither  more  nor  less  than  a  diseased  condition  of  the  body. 

The  insurance  in  this  case  was  against  bodily  injuries 
effected  through  external,  violent,  and  accidental  means.  It 
was  not  to  extend  "  to  an}^  death  or  disability  which  may  have 
been  caused  wholly  or  in  part  by  bodily  infirmities,  or  disease 
existing  prior  or  subsequent  to  the  date  "  of  the  policy,  "  nor 
to  any  case  except  where  the  injury  is  the  proximate  or  sole 
cause  of  the  disability  or  death."  There  cannot  be  the  slightest 
vloubt  that  malignant  pustule  is  regarded  generally,  by  those 
who  have  but  the  usual  acquaintance  with  such  matters,  as  a 


518  Insurance  :   Fire,  Life,  Marine.  o.  xviii. 

disease.  Every  particle  of  testimony  given  by  the  doctors 
called  by  the  plaintiff,  shows  clearly,  to  my  mind,  that  it  is  so 
regarded  generally  in  the  medical  world,  and  that  it  is  only 
when  these  doctors  are  asked  to  define  the  case  in  a  manner  to 
suit  their  refined  notions  of  scientific  and  artistic  accuracy 
that  they  define  the  trouble  as  a  "  pathological  condition  of 
the  body ; "  in  the  one  case,  "  succumbing  to  infliction  of  this 
particular  poison,"  and  in  the  other,  "  following  this  particular 
inroad  of  this  particular  kind  of  bacilli." 

The  dijfference  between  the  cause  of  this  condition  and  the 
causes  of  typhoid  fever,  tuberculosis,  small-pox,  scarlet  fever, 
and  such  like  diseases,  is  that  this  particular  condition  is  caused 
by  different  bacilli  from  the  others,  and  they  come  in  contact 
with  the  skin  or  enter  into  its  pores,  while  in  the  other  cases 
they  are  generally  breathed  in. 

But  no  abrasion  of  the  skin  is  needed  to  produce  the  con- 
tact of  the  bacilli,  and  what  follows  from  such  contact  seems 
to  be  as  plainly  a  disease  as  in  the  case  of  small-pox  or  typhoid 
feyer.  The  question  then  is,  even  assuming  that  some  particu- 
lar physicians  refuse  to  call  this  a  disease  and  describe  it  as  a 
pathological  condition,  whether  it  is  not  a  disease  within  the 
meaning  of  that  term  as  used  in  this  policy  ?  Taking  all  the 
facts  testified  to  by  these  physicians  of  the  plaintiff,  including 
their  own  special  description  of  this  condition  of  the  body,  and 
it  seems  to  me  there  can  be  no  intelligent,  rational  doubt  that 
the  insured  died  from  a  disease  attacking  him  subsequent  to  the 
issuing  of  the  policy.  He  did  not  die  from  any  accident, 
within  the  provision  contained  in  the  policy  defining  an  acci- 
dent. The  definition  given  by  the  physicians  for  the  plaintiff, 
as  to  the  difficulty  being  a  pathological  condition  of  the  body 
and  not  a  disease,  is  upon  these  facts  entirely  too  fragile  to  base 
a  recovery  upon,  and  the  distinction  between  a  disease  and  a 
pathological  condition  of  the  body  is,  with  reference  to  this 
case,  much  too  refined  for  common  acceptance.  It  seems  to 
me  clear  that  the  meaning  of  the  words  used  in  the  policy 
cover  just  such  a  case,  and  that  the  parties  never  intended 
that  a  cause  of  death  which  to  all  outward  appearances,  and 
to  the  world  in  general,  was  a  disease,  should  be  converted 
into  a  "  pathological  condition "  of  the  body  caused  by  aa 
accident. 


0.  xriii.  Baoon  v.  XT.  S.  Mut.  Aoc.  Aeeo.  519 

The  judgment  should  be  reversed  and  a  new  trial  ordered ; 
costs  to  abide  the  event. 

O'Brien,  J.  (dissenting). — The  principal,  if  not  the  only, 
question  in  this  case  is  whether  the  death  of  the  insured  was 
the  result  of  accident,  within  the  meaning  of  the  words  used 
in  the  contract,  or  of  disease  or  other  cause  not  covered  by  the 
stipulations  of  the  parties.  There  is  no  dispute  as  to  the  fact 
that  death  resulted  from  theeffectsof  a  malignant  sore  upon  the 
lip  of  the  insured,  which,  soon  after  its  appearance,  involved  the 
neighboring  parts,  producing  septicemia  and  utter  exhaustion. 
There  were  two  theories  as  to  what  this  local  sore  was.  On  the 
part  of  the  plaintiflF,  it  was  claimed  that  it  was  what  was 
known  as  malignant  pustule,  while  the  defendant  sought  to  es- 
tablish the  fact  that  it  was  a  facial  carbuncle  and,  therefore,  a 
disease,  or  the  result  of  disease,  within  the  terms  or  meaning 
of  the  contract.  The  court  instructed  the  jury  that  if  the  sore 
was,  in  fact,  a  carbuncle,  that  the  plaintilff  could  not  recover, 
but  that  if  it  was  a  malignant  pustule  produced  upon  the  per- 
son of  the  deceased  in  the  manner  claimed  by  the  plaintiff,  that 
then  the  plaintiff  was  entitled  to  a  verdict. 

The  testim'^ny  of  the  medical  experts  produced  by  the  plain- 
tiff was  to  the  effect  that  this  pustule  is  not  a  disease  in  the 
strict  sense  of  tnat  term,  but  a  pathological  condition  of  the  sys- 
tem caused  by  the  accidental  infliction  of  diseased  or  putrid  ani- 
mal matter,  infested  with  bacteria  or  bacilli  anthrax,  upon  the 
thin  skin  of  the  lip,  whence  the  bacilli  multiply  and  are  diffused 
through  the  system.  The  animal  virus  that  produces  the  sore 
comes  from  the  hides,  hair,  wool,  or  flesh  of  animals  suffering 
from  the  disease  known  as  anthrax,  and  may  be  transmitted  to 
human  beings  directly  by  the  immediate  contact  of  the  individ- 
ual with  it,  by  his  touching  or  handling  it,  and  then  bringing 
the  matter  in  contact  with  the  skin  or  thin  mucous  membrane, 
or  it  may  be  carried  by  carrion  birds,  or  by  insects,  and  in  vari- 
ous other  ways  communicated  to  man  and  inflicted  or  im- 
planted upon  some  exposed  portion  of  the  body.  People  whose 
business  requires  them  to  handle  hides,  hair,  or  wool,  and  who 
live  in  cattle-grazing  regions,  or  localities  such  as  the  southern 
or  western  portions  of  the  United  States,  are,  according  to  the 
proofs  in  this  case,  more  exposed  to  malignant  pustule  than  per- 


530  Insurance  :   Fire,  Lifk,  Marine.  c.  xvm 

sons  in  other  vocations,  or  who  live  in  localities  where  cattle  do 
not  abound. 

The  insured  went  to  Council  Bluffs  on  the  1st  of  February, 
1884,  and,  as  has  been  stated,  died  there  in  less  than  two 
months  after.  He  was  first  employed  as  a  bookkeeper  in  a 
meat  market,  and  later  as  a  check  clerk  in  the  transfer  de- 
partment of  the  Union  Pacific  Railroad.  It  was  shown  that 
carloads  of  hides  frequently  pass  that  station,  and  that  a  large 
number  of  cattle  are  brought  there  and  slaughtered  in  the 
vicinity,  but  there  was  no  direct  or  positive  proof  that  the 
deceased  ever  came  in  immediate  contact  with  the  hides,  or 
even  the  flesh,  of  these  animals. 

We  must  accept  the  verdict  of  the  jury  that  the  deceased 
died  from  the  effects  of  malignant  pustule.  Whatever  an 
appellate  court  may  think  of  the  weight  and  force  of  the 
evidence  submitted  at  the  trial,  it  cannot,  when  there  is  some 
evidence,  ignore  or  disregard  the  deliberate  judgment  of  the 
body  which,  under  our  system  of  administering  justice,  is  em- 
powered and  required  to  determine  disputed  questions  of  fact. 
There  was  evidence  to  warrant  the  finding,  and  in  such  a  case, 
after  review  by  the  General  Term,  this  court  must  deal  with 
the  case  upon  the  principle  that  death  was  caused  as  claimed 
by  the  plaintiff. 

Whether  the  malignant  pustule  of  which  the  insured  died 
was  the  result  of  animal  virus  coming  in  contact  with  the  lip, 
or  whether  the  sore  was  produced  in  some  other  way,  was, 
perhaps,  a  more  difficult  question  ;  but  in  view  of  the  testimoay 
of  the  plaintiff  tending  to  show  that  the  infliction  of  this  virus 
upon  the  person  is  the  only  cause  of  pustule,  and  that  the  in- 
sured was  in  some  degree  exposed  to  it,  and  that  death  gener- 
ally follows  contact  with  it  in  a  few  days,  we  think  it  cannot 
be  said  that  this  finding  is  based  wholly  on  speculation  and 
conjecture.  It  was  the  province  of  the  jury  to  draw  all  proper 
inferences  from  the  testimony,  and  while  there  was  no  direct 
or  positive  proof  as  to  when  or  how  the  animal  virus  came  in 
contact  with  the  person  of  the  deceased,  yet  the  jury  was  war- 
ranted in  finding  from  the  other  testimony  in  the  case  that  in 
some  way  the  bacilli  anthrax  were  implanted  upon  the  lip 
where  the  sore  appeared,  and  at  some  time  within  ninety  days 
prior  to  the  death  of  the  insured.     Assuming  that  death  was 


0,  xrra.  Baoon  r.  U.  S.  Mrr.  Aoc.  Asso.  531 

the  result  of  malignant  pustule,  caused  in  the  manner  claimed 
by  the  medical  experts  wlio  testified  in  behalf  of  the  plaintiff, 
the  question  remains  whether  this  was  "  external,  violeyit  and 
accidental  means^''  within  the  intent  and  meaning  of  the  con- 
tract. This  court  has  held  that  where  death  results  from 
breathing  an  atmosphere  impregnated  with  illuminating  gas 
which  in  some  way  escaped  from  pipes  while  the  insui-ed  was 
asleep,  the  beneficiary  was  entitled  to  recover  under  a  policy 
containing  those  words.  Paul  v.  T.  Ins.  Co.,  112  N.  Y.  472. 
Death  by  drowning  is  included  in  such  a  contract.  Trew  v.  R. 
P.  Ass'n,  6  H.  &  N.  839  ;  Mallory  v.  T.  Ins.  Co.,  47  N.  Y.  53. 
So  is  death  "which  may  have  been  produced  by  fright.  Mc- 
Qlinchey  v.  F.  <&  C.  Co.,  80  Me.  251. 

Without  attempting  to  collate  all  the  cases  on  this  point,  it 
is  sufficient  to  observe  that  the  courts,  both  in  this  country  and 
in  England,  have  given  to  these  words  a  broad  and  liberal 
interpretation  in  favor  of  the  insured  or  the  beneficiary  desig- 
nated in  the  policy.  U.  8.  M.  A.  Assn.  v.  Barry,  131  U.  S. 
100,  121 ;  N.  A.  I.  &  A.  Ins.  Co.  v.  Burroughs,  69  Penn.  St. 
43;  A.  Ins.  Co.  v.  Crandal,  120  U.  S.  527;  Winspear  y.  A. 
Ins.  Co.,  L.  E.,  6  Q.  B.  Div.  42 ;  Paul  v.  T.  Ins.  Co.,  supra. 
Guided  by  the  principles  laid  down  in  these  and  other  cases, 
and  by  what  seems  to  have  been  the  intention  of  the  parties,  I 
am  of  the  opinion  that  we  should  hold  in  this  case  that  the 
infliction  of  animal  virus  by  some  exterior  force  or  power 
upon  the  person  of  the  deceased,  as  found  by  the  jury,  was  a 
bodily  injury,  "effected  through  external,  violent,  and  acci- 
dental means,"  producing  death,  within  the  intent  and  mean- 
ing of  the  policy,  and  that  the  defendant  is  liable.  When 
death  results  from  the  accidental  infliction  of  the  animal  virus 
upon  the  person,  whether  by  handling  the  same,  or  deposited 
upon  his  person  by  insects  or  otherwise,  as  shown  by  the  wit- 
nesses for  the  plaintiff,  it  cannot,  I  think,  be  said  that  the  jury 
was  bound  to  find  that  the  malignant  pustule  was  a  disease 
within  the  conditions  of  the  policy  exempting  the  defendant 
from  liability.  The  jury  could  have  found,  in  view  of  the 
evidence,  that  the  deceased  lived  in  alocalitv,  and  was  engfaffed 
in  employments  in  which  he  was  exposed  to  contact  with  this 
peculiar  form  of  poison,  and  it  seems  to  me  that  a  malignant 
pustule  produced  by  the  deposit  upon  the  lip  of  the  deceased 


Insurance  :    Fire,  Life,  Marine.  o.  xtiii. 

of  a  particle  of  this  animal  virus,  resulting  in  death,  is  as  much 
an  accident  as  in  the  case  of  death  from  breathing  illuminating 
gas  while  asleep.  There  was  evidence  upon  which  the  jury  could 
have  found  that  the  deceased  contracted  the  pustule  in  this  way. 

For  these  reasons  I  am  constrained  to  dissent  from  the  pre- 
vailing opinion  in  this  case,  and  am  in  favor  of  affirming  the 
judgment. 

All  concur  with  Peckham,  J.,  except  Ruger,  C.  J.,  and 
O'Brien,  J.,  dissenting. 

Judgment  reversed. 

Supreme  Court  of  Judicature,  1881. 
LAWREN^CE  v.  ACCIDENTAL  INS.   CO. 

(L.  R.,  7  Q.  B.  D.  216.) 

Meaning  of  proviso,  "  direct  and  sole  cause  of  death,^'  where  an  excepted  cauis 
co-operates  to  produce  the  accident. 

Denman,  J. — During  the  argument  of  this  case  I  have  had 
considerable  doubt  as  to  the  meaning  of  the  condition  in  the 
policy,  and  I  am  not  sure  that,  but  for  Winspear  v.  Accident 
Insurance  Co.,  6  Q.  B.  D.  42,  I  should  not  have  thought  that 
the  company  were  protected.  The  facts  are  these :  The  de- 
ceased person,  while  on  a  railway  platform,  was  suddenly 
seized  with  a  fit,  which  caused  him  to  fall  forward  off  the  plat- 
form on  to  and  across  the  railway.  A  locomotive  engine  was  at 
that  moment  passing  through  the  station  ;  it  passed  over  his 
neck  and  body,  and  he  received  mortal  injuries,  of  which  he  then 
and  there  died.  Then  it  is  stated  in  the  case:  "The  falling 
forward  of  the  insured  off  the  platform  as  aforesaid  was  in  con- 
sequence of  his  being  seized  with  a  fit  or  sudden  illness,  and  but 
for  such  fit  or  illness  he  would  not  have  suffered  death  or  injury 
as  before  mentioned."  Now,  the  immediate  cause  of  death  is 
not  in  the  least  disputable  ;  but  there  is  no  doubt  that  if  he  had 
not  fallen  there  in  consequence  of  the  fit  he  would  not  have 
suffered  death,  and  in  that  sense  the  fit  led  to  his  death.  The 
question  is  whether  that  was  merely  one  of  several  events 
which  brought  about  the  accident,  in  the  sense  that  it  caused 
the  accident  to  happen  by  causing  him  to  be  there,  or  whether 
it  was,  within  the  meaning  of  this  proviso,  a  cause  of  death 


0.  XVIII.  La.wrence  v.  Accidental  Ins.  Co.  523 

which  would  prevent  the  policy  M{)plying  to  the  case.  In 
Winspear  v.  Accident  In^yirance  Co.,  where  a  man,  while  ford- 
ing a  river,  was  seized  with  a  fit,  and  so  fell  and  was  drowned 
in  the  river — a  fit  being  undoubtedly  a  kind  of  a  disease  which 
was  not  within  the  meaning  of  the  policy,  which  was  very  like 
the  present  one,  although  not  exactly  identical — it  was  held 
that  the  death  did  not  arise  from  disease  within  the  exceptions 
in  the  policy.  By  this  present  policy,  if  the  insured  shall  re- 
ceive any  personal  injury  caused  by  accidental  and  external 
violence  within  the  meaning  of  this  policy  and  the  conditions 
thereto,  and  the  direct  effects  of  such  injuries  shall  occasion 
his  death  within  three  calendar  months  from  the  happening 
thereof,  then  the  funds  of  the  company  shall  be  subject  to  pay 
the  sum  assured.  "  Provided  always  that  this  policy  insures 
payment  only  in  case  of  injuries  accidentally  occurring  from 
material  and  external  cause  operating  upon  the  person  of  the 
insured  where  such  accidental  injury  is  the  sole  and  direct 
cause  of  death  to  the  insured,  or  disability  to  follow  his  avoca- 
tions ;  but  it  does  not  insure  in  case  of  death  or  disability  aris- 
ing from  fits  or  rheumatism,  gout,  hernia,  erysipelas,  or  any 
disease  whatsoever  arising  before  or  at  the  time  or  following 
such  accidental  injury  (whether  consequent  upon  such  acci- 
dental injury  or  not,  and  whether  causing  such  death  or  dis- 
ability directly  or  jointly  with  such  accidental  injury)."  Now, 
the  words  that  appeared  to  me  during  a  part  of  the  argument 
to  be  strongly  in  favor  of  the  defendants  in  this  case  are  those 
latter  words,  "causing  such  death  or  disability  directly  or 
jointly  with  such  accidental  injury."  If  the  words  had  simply 
been  these,  "  this  policy  shall  not  attach  in  cases  where  the 
death  is  caused  by  an  accident,  jointly  with  a  fit,"  I  should 
have  thought  it  was  a  case  in  which  in  all  probability  the 
defendants  would  be  entitled  to  our  judgment.  But  these 
three  last  lines  of  the  clause  are  merely  lines  in  a  parenthesis, 
and  they  are  put  in  for  the  purpose  of  showing  that  the  excep- 
tion will  appl}'',  whether  the  disease  be  consequent  upon  the 
accidental  injury  or  not,  or  whether  the  disease  be  one  that  shall 
have  caused  the  death  itself  directly,  or  whether  it  shall  have 
caused  the  death  jointly  with  the  accidental  injury.  But  then 
these  are  words  merely  defining  the  cases  in  Avhich  the  pre- 
vious words,  "  arising  from,"  may  be  applicable.     The  word* 


524  Insurance:    Fire,  Life,   iMaimne.  o.  xviit, 

*'  arising  from  "  have  already  received  judicial  construction  in 
the  case  of  Winspear  v.  Accidental  Insurance  Co.^  in  which  it 
was  held  that  the  death  did  not  arise  from  the  disease.  It 
appears  to  me  that  where  words  are  merely  pot  in  as  a  varia- 
tion of  those  previously  used,  and  which  are  exactly  the  same 
as  those  that  have  received  a  judicial  construction,  we  cannot 
put  a  different  construction  upon  them.  I  think  we  are  bound 
to  hold  that  the  death  arose  from  the  engine  destroying  the 
insured  by  coming  across  hira,  and  not  from  the  previous  fact 
of  a  fit  having  attacked  him  and  so  brought  him  there.  It  is 
far  better  for  us  to  decide  in  accordance  with  Whispear  v. 
Accidental  Insurance  Co.,  on  words  that  are  really  identical, 
so  far  as  they  operate  in  this  case,  than  to  gather  a  distinction 
out  of  words  which  are,  after  all,  merely  used  as  illustrations 
of  the  previous  descriptions. 

Watkin  Williams,  J. — I  am  clearly  of  the  opinion  that  the 
plaintiff  is  entitled  to  recover,  and  I  desire  to  base  my  decision 
upon  reason  and  principle,  and  not  upon  the  decided  cases.  It 
seems  to  me  perfectly  clear,  and  altogether  free  from  doubt, 
that  upon  every  principle  of  construction  and  upon  the  true 
meaning  of  this  policy,  the  company  are  liable  to  pay  the 
administratrix  in  this  case.  Now,  the  whole  case  depends  on 
the  true  construction  of  the  words  in  the  proviso,  because  m 
this  case  the  deceased  person,  having  fallen  down  accidentally 
in  a  fit  from  the  platform  of  the  railway  on  to  the  rails,  was, 
while  lying  there,  accidentally  run  over  by  a  train  that  hap- 
pened at  that  moment  unfortunatel}^  to  come  up,  and  he  was 
undoubtedly  killed  by  the  direct  external  violence  of  the  engine 
upon  his  body,  which  caused  his  death  immediately.  The 
question  arises  whether,  according  to  the  true  construction  of 
the  proviso,  it  can  be  said  that  this  is  a  case  of  death  arising 
from  a  fit ;  because,  if  this  death  did  not  arise  from  the  fit, 
according  to  the  true  construction  of  the  policy,  the  remainder 
of  the  clause  does  not  come  into  existence  at  all,  and  is  inap- 
plicable. It  seems  to  me  that  the  well-known  maxim  of  Lord 
Bacon,  which  is  applicable  to  all  departments  of  the  law,  is 
directly  applicable  to  this  case.  Lord  Bacon's  language  in  his 
"Maxims  of  the  Law,"  Reg.  1,  runs  thus:  "It  were  infinite 
for  the  law  to  consider  the  causes  of  causes,  and  their  impul- 


c.  ivm.  Lawrence  v.  Accidental  Ins.  Co.  525 

sions  one  of  another ;  therefore  it  contenteth  itself  with  the 
immediate  cause."  Therefore,  I  say,  according  to  the  true 
principle  of  law,  we  must  look  at  only  the  immediate  and  prox- 
imate cause  of  death ;  and  it  seems  to  me  to  be  impracticable 
to  go  back  to  cause  upon  cause,  which  would  lead  us  back  ulti- 
mately to  the  birth  of  the  person,  for  if  he  had  never  been  born 
the  accident  would  not  have  happened.  The  true  meaning  of 
this  proviso  is  that,  if  the  death  arose  from  a  fit,  then  the  com- 
pany are  not  liable,  even  though  the  accidental  injury  con- 
tributed to  the  death  in  the  sense  that  they  were  both  causes, 
which  operated  jointly  in  causing  it.  That  is  the  meaning,  in 
my  opinion,  of  this  proviso.  But  it  is  essential  to  that  con- 
struction that  it  should  be  made  out  that  the  fit  was  a  cause  in 
the  sense  of  being  the  proximate  and  immediate  cause  of  the 
death,  before  the  company  are  exonerated,  and  it  is  not  the 
less  so  because  you  can  show  that  another  cause  intervened 
and  assisted  in  the  intervention.  Now,  if  the  argument  of  the 
defendants  be  a  good  one,  this  absurdity  would  follow.  Sup- 
posing a  man  went  out  in  the  field  following  sports,  and  he 
were  to  be  seized  with  a  fit,  either  a  fainting  fit  or  an  epileptic 
fit,  or  any  other  fit,  and  had  retired  to  one  side  of  the  field, 
and  remained  there  recovering  from  the  fit ;  and  being  there, 
a  sportsman — not  knowing  he  was  there — accidentally  shot 
him :  it  might  be  said,  in  the  same  manner,  that  the  cause  of 
death  arose  from  a  fit.  It  seems  to  me  only  to  require  to  be 
stated,  to  show  the  entire  absurdity  of  it.  The  only  difference 
between  that  case  and  this  is  in  the  time  that  intervened  be- 
tween the  time  of  the  fit  and  the  person  being  placed  within 
the  influence  of  the  succeeding  accident,  which,  in  this  case, 
was  very  short ;  ])ut  I  fail  to  see,  in  point  of  reason,  that  there 
is  any  difference  between  one  hour,  or  one  minute,  or  one  day. 
The  break  in  the  chain  of  causes  seems  to  be  equally  complete. 
I,  therefore,  put  ray  decision  on  the  broad  ground  that,  accord- 
ing to  the  true  construction  of  this  policy  and  this  proviso,  this 
was  not  an  act  arising  from  a  fit ;  and,  therefore,  whether  it 
contributed  directly  or  indirectl\%  or  by  Siny  other  mode  to  the 
happening  of  the  subsequent  accident,  seems  to  me  wholly 
immaterial,  and  the  judgment  of  the  court  ought  to  be  in  favor 
of  the  plaintiff. 

Judgment  for  the  plaintiff 


Insurance  :   Fire,  Life,  Marine.  o.  iviil 

Supreme  Judicial  Court  of  Massachusetts,  1883. 
TUTTLE  V.  TRAVELLER'S  INS.  CO. 

(134  Mass.  175.) 

Expoture  to  obvious  or  unnecessary  danger.     Due  diligence.     When  not  for 
jury. 

Action  of  contract  upon  an  accident  policy  of  insurance, 
issued  b}'  defendant  upon  the  life  of  Stephen  Tuttle,  and  made 
payable  to  plaintiff  his  wife. 

The  evidence  showed  that  about  ten  o'clock  in  the  evening 
of  March  13,  1879,  Tuttle  was  killed  by  being  struck  by  a  rail- 
road train,  while  running  along  the  tracks  in  front  of  it,  for  the 
purpose  of  getting  on  a  train  approaching  in  an  opposite  direc- 
tion on  a  parallel  track.  The  trial  judge  directed  a  verdict  for 
the  defendant,  and  reported  the  case  for  the  consideration  of 
the  full  court. 

C.  Allen,  J. — The  policy  provides,  among  other  things, 
that  no  claim  shall  be  made  under  it  "  when  the  death  oir 
injury  may  have  happened  in  consequence  of  exposure  to  any 
obvious  or  unnecessary  danger."  It  is  also  made  subject  to  tho 
condition  that  "  the  party  insu;^ed  is  required  to  use  all  due 
diligence  for  personal  safety  and  protection."  Both  of  these 
provisions  were  violated  by  the  act  of  the  deceased  in  going 
upon  and  along  the  track  of  the  railroad,  under  the  circum- 
stances stated  in  the  report.  Wright  v.  Boston  mid  Maine 
Railroad,  129  Mass.  440,  443.  No  two  cases  are  precisely 
alike  in  their  facts,  and  what  constitutes  due  care  must  depend 
upon  the  facts  of  each  case.  But  the  conduct  of  the  deceased 
was  such  as,  in  the  words  of  Mr.  Justice  Colt,  is  "  condemned 
by  the  general  knowledge  and  experience  of  all  prudent  men, 
and  is  conclusive  on  the  question  of  due  care."  The  danger 
was  obvious,  the  exposure  to  it  unnecessary,  the  want  of  due 
diligence  clear,  and  the  death  of  the  insured  occurred  in  conse- 
quence thereof.  See  also  Wills  v.  Lynn  and  Boston  Railroad, 
129  Mass.  351 ;  Johnson  v.  Boston  and  Maine  Railroad,  125 
Mass.  75  ;  Allyn  v.  Boston  and  Albany  Railroad,  105  Mass. 
77 ;  Gordell  v.  New  York  Central  and  Hudson  River  Railroad, 
75  N.  Y.  330  ;  70  N.  Y.  119  ;  64  N.  Y.  535  ;  Baxter  v.  Troy 


0.   XVTII.  TUTTLE    V.   TrAVELLKr's    In8.  Co.  52^ 

and  Boston   Railroad,  41  N.  Y.  502 ;    McCarty  v.   Delaware 
and  Hudson  Canal,  \1  Hun,  Y4. 

The  plainti£f  contends  that  it  was  not  the  exposure  or  neg- 
Hgence  of  the  assured  which  caused  his  death,  but  the  coming 
upon  him  of  the  locomotive  engine,  the  bell  or  whistle  of  which 
may  not  have  sounded  ;  that  this  was  a  new  force  or  power 
which  intervened,  of  itself  sufficient  to  stand  as  the  cause  of 
the  misfortune  ;  that  it  Avas  for  the  jury  to  determine  whether 
or  not  the  railroad  corporation  was  negligent ;  and  that,  if  so, 
the  negligence  of  the  assured,  if  it  existed,  was  too  remote  to 
defeat  the  policy.  Insurance  Go.  v.  Tweed,  7  "Wall.  44,  52* 
Milwaukee  and  St.  Paul  Railway  v.  Kellogg,  94  U.  S.  4fi9,  475  ; 
Schcffer  v.  Railroad  Co.,  105  U.  S.  249,  252.  But,  without 
speculating  as  to  possible  cases,  we  do  not  think  that  the  doc- 
trine relied  on  is  applicable  to  this  case.  If  a  person  voluntarily 
places  himself  in  a  position  where  he  is  exposed  to  an  obvious 
danger,  and  the  precise  injury  happens  to  him  which  there  is 
reason  to  fear,  it  cannot  fairly  be  held  that  the  language  ol 
this  policy  was  not  intended  and  understood  to  be  applicable 
to  such  a  case.  For  example,  if  one  while  walking  on  a  rail- 
road track  is  assaulted  by  a  robber  or  a  dog,  or  is  struck  by 
lightning,  his  act  of  traveling  there  has  no  tendency  to  pro- 
duce the  injury,  and  is  not  to  be  deemed  a  contributory  cause 
thereof.  But,  on  the  other  hand,  if  one  who  goes  into  a  battle 
is  hit  by  a  bullet,  or  if  one  who  goes  up  in  a  balloon  is  blown 
out  to  sea  by  the  currents  of  air,  or  if  one  who  makes  a  railroad 
track  his  path  for  travel  is  run  over  by  a  passing  locomotive 
engine,  he  must  ordinarily  in  any  legal  question  be  held  to 
take  the  risk  of  those  results.  There  is  in  each  of  these  cases 
such  an  association  of  cause  and  effect,  that  the  one  must  be 
held  to  have  contributed  to  the  other.  To  hold  that  the  death 
of  the  assured  in  the  present  case  did  not  happen  in  consequence 
of  his  exposure  to  the  risk,  but  from  a  new  force  or  power 
which  intervened,  would  be  to  fritter  away  the  language  of  the 
policy  by  metaphysical  distinctions  too  fine  to  enter  into  the 
understanding  or  contemplation  of  parties  engaged  in  the  prac- 
tical business  of  making  a  contract  of  insurance.  We  must 
assume  that  the  assured  read  his  polic}",  and  was  acquainted 
with  its  language  and  attached  some  practical  meaning  to  it. 
See  White  v.  Lang,  128  Mass,  598 ;  McGraih  v.  Merwin,  112 


628  Insurance:   Fire,  Life,  Marine.  o.  xviii. 

Mass.  467;  Norton  v.  Eastern  Railroad^  113  Mass.  366; 
McDonald  v.  Snelling,  14  Allen,  290 ;  Oluff  v.  Mutual  Benejit 
Ins.  Co.,  13  Allen,  308,  319  ;  s.  c,  99  Mass.  317,  329;  Harper 
V.  Phoenix  Ins.  Co..,  19  Mo.  506. 

Judgment  on  the  verdict. 

Pennsylvania  Supreme  Court,  1883. 
BUEKHAKD  v.   TKAYELLERS'   INS.  CO. 

(102  Pa.  St.  262.) 

Atcideni.     Voluntary  exposure  to  unnacessary  danger.     Walking  or  being  on 
road-bed  of  railway. 

Chief  Justice  Mercur  delivered  the  opinion  of  the  court. 

This  case  arises  on  a  contract  of  insurance  against  injuries 
and  death  through  external,  violent,  and  accidental  means. 
The  death  of  the  intestate  was  so  caused.  The  general  terms 
of  the  policy  are  broad  enough  to  make  the  company  liable. 
It  claims  exemption  therefrom  undei'  certain  exceptions  in  the 
policy.  What  rule,  then,  must  be  applied  in  the  interpretation 
of  this  contract  and  its  exceptions  ? 

The  true  principle  of  sound  ethics,  says  Chancellor  Kent, 
is  to  give  the  contract  the  sense  in  which  the  person  making 
the  promise  believes  the  other  party  to  have  accepted  it.  A 
just  sense  should  be  exercised  in  so  interpreting  it  as  to  give 
due  and  fair  effect  to  its  provisions.  2  Kent's  Com.  557.  "When 
a  party  uses  an  expression  of  his  liability  having  two  meanings, 
one  broader  and  the  other  more  narrow,  and  each  equally  prob- 
able, he  cannot,  after  an  acceptance  by  the  other  contracting 
party,  set  up  the  narrow  construction.  2  Whar.  on  Con.  §  670. 
Hence,  when  an  insurance  company  tenders  a  policy  to  a  party 
seeking  to  be  insured,  and  uses  in  the  policy  ambiguous  words, 
these  words  will  be  held  to  have  the  meaning  most  favorable 
to  the  insured,  as  the  presumption  is  that  on  this  construction 
he  took  the  policy,  and  as  the  compan}'^  could  have  avoided  the 
difficulty  by  being  more  specific.  Id.;  Fowkes  v.  Ins.  Co..,  3  B. 
&  S.  917.  The  words  in  such  case,  said  Mr.  Justice  Blackburn, 
ought  to  be  construed  in  that  sense  in  which,  looking  fairly  at 
them,  a  prudent  man  would  have  understood  the  words  to 
mean.     Id.     It  is  now  well  recognized  as  a  general  rule,  that 


O.  XVIII.  BURKHARD    V.  TRAVELLERS'    InS.  Co.  629 

"when  a  stipulation  or  an  exception  to  a  policy  of  insurance, 
emanating  from  tiie  insurers,  is  capable  of  two  meanings,  the 
one  is  to  be  adopted  which  is  most  favorable  to  the  insured. 
May  on  Ins.  §§  172-179  ;  Wood  on  Ins.  §§  141-146  ;  Allen  v. 
Ins.  Co.,  85  N.  Y.  473  ;  Western  Ins.  Co.  v.  Cropper,  8  Casey, 
351 ;  White  v.  Smith,  9  Id.  186.  In  case  of  doubt  as  to  the 
meaning  of  terms  emanating  from  an  insurance  company,  they 
are  to  be  construed  most  strongly  against  the  insurer.  May  on 
Ins.,  supra;  Fowhes  v.  Ins.  Co.,  supra;  Wilson  v.  Ins.  Co.,  4 
R.  I.  156  ;  Bartlett  v.  Ins.  Co.,  46  Maine,  500 ;  Bowman  v. 
Sa7ne,  27  Mo.  152  ;  Ins.  Co.  v.  Slaughter,  12  Wall.  404  ;  K  A. 
Life  <&  Ago.  Ins.  Co.  v.  Burroughs,  19  P.  F.  Smith,  43. 

The  business  of  this  company  is  to  insure  against  accidents. 
The  purpose  of  this  policy  is  to  pay  specific  damages  for  bodily 
injuries  and  death  caused  by  external,  violent,  and  accidental 
means.  The  death  of  the  intestate  was  so  caused.  The  com- 
pany seeks  to  avoid  liability  under  two  clauses  in  the  policy. 
One  provides,  the  insurance  shall  not  extend  to  a  case  of  death 
or  injury  caused  by  "  voluntary  exposure  to  unnecessary  dan- 
ger ;  "  the  other,  that  "  walking  or  being  on  the  road-bed  or 
bridge  of  any  railway  are  hazards  not  contemplated  or  covered 
by  this  contract,  and  no  sum  will  be  paid  for  disability  or  loss 
of  life  in  consequence  of  such  exposure,  or  v^^hile  thus  exposed." 
•  The  insured  was  traveling  by  rail  through  Indiana  on  his 
way  to  Kentucky.  The  train  stopped  on  the  bridge  across  the 
Ohio  Eiver  by  reason  of  the  draw  part  of  the  bridge  being 
open.  He  went  to  the  front  platform  of  the  coach  in  which  he 
was  riding,  and  stepped  off,  and  through  a  hole  in  the  floor  of 
the  bridge,  causing  his  death.  This  hole  was  about  three  feet 
wide  and  four  feet  long.  It  was  caused  by  the  removal  of 
some  planks  during  the  making  of  repairs. 

1.  Was  this  act  of  the  insured  a  voluntary  exposure  to 
unnecessary  danger? 

To  make  him  guilty  of  a  "voluntary  exposure  to  danger," 
he  must  intentionally  have  done  some  act  which  reasonable  and 
ordinary  prudence  would  pronounce  dangerous.  The  uncon- 
tradicted evidence  shows  that  several  other  passengers  got  out 
of  the  coach,  and  some  of  them  in  advance  of  the  insured. 
They  certainly  apprehended  no  danger.  It  is  customary  for 
male  passengers  to  alight  when  a  train  stops  for  any  length  of 
84 


630  Insueanoe:   Fire,  Life,  Marine.  o.  xviii. 

time.  No  notice  was  given  to  passengers  that  it  was  dangerous 
to  get  out  of  the  coach  where  it  stood.  So  far  as  appears,  the 
bridge,  with  the  exception  of  this  hole,  was  well  covered  with 
plank  and  entirely  safe.  When  the  intestate  ahghted,  other 
passengers  were  standing  on  the  bridge  near  the  brakeman. 
The  latter  was  sitting  on  timber  that  was  lying  on  the  foot- 
walk  of  the  bridge,  and  was  to  be  used  in  the  repairs  being 
made.  The  passengers  had  no  knowledge  of  these  repairs. 
The  brakeman  held  his  lantern  so  placed  on  the  floor  that 
another  timber  cast  its  shadow  over  this  hole,  making  it  impos- 
sible for  the  insured  to  see  it.  He  could  see  that  portion  of  the 
floor  lighted  by  the  lantern,  and  the  passengers  standing  there- 
on. He  could  see  the  brakeman  near  them.  He  stepped  out 
of  the  coach  in  plain  sight  of  the  brakeman.  He  had  a  right 
to  suppose  he  would  land  on  a  floor  as  firm  as  that  on  which 
the  others  stood.  Neither  word  nor  sight  gave  him  any  notice 
of  danger.  He  did  not  approach  the  opening  caused  by  the 
draw,  and  was  not  injured  thereby. 

It  is  true  he  voluntarily  left  the  car  ;  but  a  clear  distinction 
exists  between  a  voluntary  act  and  a  voluntary  exposure  to 
danger.  Hidden  danger  may  exist ;  yet  the  exposure  thereto 
without  any  knowledge  of  the  danger  does  not  constitute  a 
voluntary  exposure  to  it.  The  approach  to  an  unknown  and 
unexpected  danger  does  not  make  the  act  a  voluntary  exposure 
thereto.  The  result  of  the  act  does  not  necessarily  determine 
the  motive  which  prompted  the  action.  The  act  may  be  vol- 
untary, yet  the  exposure  involuntary.  The  danger  being  un- 
known, the  injury  is  accidental. 

Accident  is  defined  by  Worcester  to  be  an  event  proceeding 
from  an  unknown  cause  or  happening  without  the  design  of  the 
agent;  an  unforeseen  event;  incident;  casualt}^ ;  chance:  and 
by  Webster,  an  event  that  takes  place  without  one's  forethought 
or  expectation ;  an  event  which  proceeds  from  an  unknown 
cause,  or  is  an  unusual  effect  of  a  known  cause,  and  therefore 
not  expected  ;  chance ;  casualt}^ ;  contingency. 

In  view  of  the  unquestioned  facts,  the  death  of  the  intestate 
was  accidental.  The  danger  was  unknown.  The  injury  was 
not  designed.  We  think  there  was  not  such  a  voluntary  expos- 
ure to  danger  as  to  fairly  bring  the  act  of  the  insured  within 
the  meaning  of  the  exception. 


0.  XVIII.  BUKKHARD    V.  TRAVELLERS'    In8.  Co.  531 

2.  "Was  he  walking  or  being  on  the  road-bed  or  bridge  of 
the  railway  ? 

He  certainly  was  not  walking  on  the  road-bed  or  bridge ; 
and,  strictly  speaking,  it  is  doubtful  whether  he  was  heing  on 
either.  The  evidence  indicates  that,  without  touching  either,  he 
probably  passed  directly  from  the  steps  of  the  car  through  the 
hole  in  the  bridge.  We  will  not,  however,  put  the  case  on  the 
narrow  ground  that  he  did  not  come  in  contact  with  either 
road-bed  or  bridge.  The  language  of  the  exception  clearly 
implies  two  thoughts  :  One,  that  the  insured  must  not  be  on 
the  road-bed  or  bridge  for  any  length  of  time  ;  the  other,  that 
the  prohibition  is  not  to  guard  against  injury  resulting  from  a 
defective  road-bed  or  defective  railway  bridge,  but  against  the 
danger  of  injury  from  trains  passing  thereon.  If  the  design 
was  to  apply  the  language  to  bridges  defectively  constructed 
or  out  of  repair,  it  would  not  have  been  restricted  to  railway 
bridges.  It  would  have  included  all  bridges,  both  foot  and 
wagon.  The  purpose  is  not  to  avoid  liability  for  injuries  result- 
ing from  being  on  bridges  unsafe  in  themselves.  The  manifest 
intent  is  to  exempt  from  responsibility  for  damages  caused  by 
collision  with  trains  moving  thereon.  The  present  is  not  like  a 
case  between  a  passenger  and  a  railway  company,  in  which  the 
company  may  be  exempt  from  liability  for  damages  arising 
from  negligence  of  the  passenger  not  voluntary.  Nor  did  the 
act  of  the  insured  prove  such  a  reckless  exposure  of  his  person, 
nor  obvious  risk  of  danger,  as  to  bring  him  within  the  applica- 
tion of  the  rule  declared  in  Morel  v.  Miss.  Valley  Ins.  Co.,  4 
Bush,  535  ;  Lovell  v.  Accident  Ins.  Co.,  3  Ins.  Law  Jour.  877 ; 
Sawtelle  v.  Railwa/y  Pass.  Ass.  Co.,  15  Blatchford,  216,  and 
kindred  cases. 

We  therefor^  think,  under  the  facts  found,  and  the  rules  of 
law  which  we  have  stated,  the  learned  judge  erred  in  holding 
that  the  conduct  of  the  insured  brought  him  within  either  of 
the  exceptions,  so  as  to  relieve  the  company  from  liability. 

Judgment  reversed. 


532  Insurance:    Fire,  Life.  Marine.  c.  xviii. 

New  York  Court  ok  Appeals,  1871. 

NORTHEUP  V.   RAILWAY   PASSENGER  ASSUR- 
ANCE  CO. 

(43  N.  Y.  516.) 
Accident  while  travieUng  by  public  or  private  conveyaneet. 

Grover,  J. — It  must  be  conceded  that  the  injury  received 
by  the  plaintiff's  intestate  does  not  come  within  the  strict  lit- 
eral words  of  the  contract  of  assurance.  By  that  contract  the 
respondent  agreed  to  pay  the  legal  representatives  of  the  intes- 
tate, in  the  event  of  her  death  from  personal  injury  ensuing  in 
three  months  from  the  happening  thereof,  when  caused  by  any 
accident  while  traveling  by  public  or  private  conve3'^ances  pro- 
vided for  the  transportation  of  travelers,  etc.  The  intestate 
was  not  actually  traveling  upon  any  public  or  private  convey- 
ance provided  for  the  transportation  of  passengers  at  the  time 
of  receiving  the  injury  which  caused  her  death.  It  appears 
from  the  facts  agreed  upon  by  the  parties,  that  the  intestate, 
prior  to  such  time,  had  undertaken  to  go  a  journey  from  Steu- 
ben to  Madison  County  ;  that  the  mode  adopted  for  making 
the  journey  was  by  rail  from  Steuben  to  Watkins  in  Schuyler 
County,  thence  by  steamer  to  Geneva,  thence  by  rail  to  Madi- 
son. That  the  intestate,  in  the  prosecution  of  such  journey, 
had  arrived  at  Geneva  on  board  the  steamer,  and,  as  usual,  was 
passing  on  foot  from  the  steamboat  landing  to  the  railway  sta- 
tion to  go  on  board  of  the  cars  for  the  remainder  of  her  jour- 
ney ;  and  while  so  passing  from  the  landing  to  the  station,  a 
distance  of  about  seventy  rods,  she  slipped  and  fell,  thereby 
receiving  an  injury  which  caused  her  death  about  four  days 
thereafter.  It  further  appears,  that  upon  the  arrival  of  the 
boat  at  Geneva  there  were  usually  hacks  at  the  landing  seek- 
ing passengers  for  any  part  of  the  village  or  the  railroad  sta- 
tion, but  that  a  large  majority  going  to  the  railroad  station 
went  there  on  foot.  The  question  for  determination  is,  whether 
at  the  time  of  receiving  the  injury  the  plaintiff  was,  within  the 
meaning  of  the  policy,  traveling  by  a  public  or  private  convey- 
ance. The  policy  must  be  construed  so  as  to  carry  into  effect 
the  intention  of  the  parties,  so  far  as  such  intention  can  be 
determined  from  the  language  used,  construed  in  the  light  of 


c.  XVIII.       NoRTHKUP  V.  Railway  Passenger  Assur.  Co.       533 

well-known  extrinsic  facts,  which  must  be  presumed  to  have 
been  known  to  the  contracting  parties  at  the  time  of  making 
the  contract,  and  in  reference  to  which  it  was  entered  into. 
One  fact  of  this  character,  very  important  in  the  present  case, 
is  that  of  the  frequent  change  required  from  one  train  of  cars 
to  another  at  intermediate  stations  upon  the  same  journey. 
Those  passing  from  Buffalo  or  the  Falls  to  New  York  by  the 
New  York  Central,  or  from  the  former  or  Dunkirk  to  the 
same  by  the  Erie,  cannot  be  unaware  of  this  fact.  Can  it  be 
said  that  a  passenger  is  not  traveling,  within  the  meaning  of 
this  contract,  by  public  conveyance,  while  passing  from  one 
train  to  go  on  board  another  in  the  actual  prosecution  of  his 
journey ;  or,  for  further  illustration,  can  this  be  said  of  a  pas- 
senger from  New  York  to  Dunkirk  by  the  Erie,  while  going 
from  the  ferry-boat  at  Jersey  City  to  get  on  board  of  the  train 
at  that  place  ?  I  think  that  such  passenger,  within  the  mean- 
ing of  this  contract,  and  also  within  the  fair  construction  of 
the  language,  is  a  traveler  by  public  conveyance  all  the  way 
from  New  York  to  Dunkirk,  although  he  may  walk  a  short 
distance  from  the  ferry-boat  to  the  train  at  Jersey  City,  or 
from  one  train  to  another  when  such  changes  are  made  at 
intermediate  stations.  An  injury  received  while  so  necessarily 
walking  in  the  actual  prosecution  of  the  journey  is  received 
while  traveling  by  public  conveyance  within  the  meaning  of 
the  policy,  as  such  walking  is  the  actual  and  necessary  accom- 
paniment of  such  travel.  There  is  no  difference  in  principle 
between  a  passenger  so  walking  and  the  intestate  in  the  pres- 
ent case.  The  presumption  is,  that  the  railroad  trains  and  the 
steamer  run  in  connection,  the  same  as  the  ferry-boat  from 
New  York  to  Jersey  City  with  the  Erie  trains,  and  that,  by 
means  of  this  connection,  the  journey  of  the  intestate  was 
designed  to  be  continuously  prosecuted  ;  and  it  surely  can 
make  no  difference  in  principle  that  the  space  to  be  walked 
over  in  going  from  one  conveyance  to  another  is  a  few  steps 
more  or  less.  Nor  does  it  affect  the  question,  that  the  intes- 
tate might  have  procured  a  hack  to  carry  her,  had  she  so 
chosen.  She  pursued  the  same  course  that  the  great  majority 
of  passengers  did.  This  she  had  the  right  to  do  under  the  con- 
tract. Theobald  v.  Railway  Passenger  Assurance  Co.  (26  Eng. 
Law  &  Equity),  432,  sustains  this  view.     In  that  case,  the  assur* 


634  Insurance  :    Fire,  Life,  Marine.  o.  xvm. 

ance  was  against  railway  accident  whilst  traveling  in  any  class 
carriage,  on  any  line  of  railway  in  Great  Britain,  etc.  This 
was  held  to  include  an  injury  received  from  slipping  on  the 
step  of  the  car,  while  standing  at  the  station,  in  getting  out. 

Judgment  reversed 


CHAPTER   XIX. 

clauses  of  the  marine  policy. 

Court  of  King's  Bench,  1809. 
PARMETER  v.  COUSINS. 

(2  Campb.  235.) 
The  voyage  :  commencement  of  the  risk,  when  it  attachea. 

This  was  an  action  on  a  policy  of  insurance  on  ship  and 
freight,  valued  at  £1,200,  at  and  from  St.  Michael's,  or  all  or 
any  of  the  Western  Islands,  to  England. 

The  ship  met  with  very  tempestuous  weather  on  her  out- 
ward voyage,  and  when  she  arrived  at  St.  Michael's  she  was 
so  leaky  that  the  crew  were  obliged  to  work  at  the  pumps  spell 
and  spell.  She  was  then  quite  in  an  unfit  state  to  take  in  a 
cargo,  and,  there  being  no  harbor  in  the  island,  she  was  in 
great  danger  from  the  storm,  which  still  continued.  In  fact, 
after  lying  at  anchor  above  twenty-four  hours,  she  was  blown 
out  to  sea  and  was  wrecked. 

Park  for  the  plaintiff  contended  that  the  underwriters 
were  clearly  answerable  for  a  loss  so  happening.  The  policy, 
being  at  as  well  di^from,  attached  the  moment  the  ship  cast  an- 
chor at  St.  Michael's  ;  and  at  any  rate  she  had  lain  there  twen- 
ty-four hours,  so  that  the  outward  risk  had  completely  expired. 
The  objection  of  want  of  seaworthiness,  when  properly  consid- 
ered, was  without  any  foundation.  The  ship  on  her  arrival  at 
St.  Michael's  was  unfit  to  commence  the  homeward  voyage ; 
but  this  was  unnecessary.  It  was  enough  if  she  was  fit  for  the 
voyage  when  the  voyage  commenced.  One  state  of  seawor- 
thiness was  required  while  she  remained  at,  and  another  when 
she  sailed yVom,  the  place.  This  distinction  had  been  settled  by 
Lord   Kenyon  {Forbes  v.  Wilson,  Park,  299,  n.;  Marsh.  155; 


536  Insurance:   Fire,  Lifh;,  Marine.  c.  xix. 

Smith  V.  Surridge,  4  Esp.  25  8.  P.),  and  recognized  by  Lord 
EUenborough  {llihhert  v.  Martin,  Sat.  after  M.  T.  1808).  If 
it  were  not  allowed,  the  policies  on  the  homeward  voyage 
would  in  almost  every  instance  be  vitiated  ;  as  it  seldom  hap- 
pens that  a  ship  on  her  arrival  at  the  outward  port  wants  no 
repairs,  but  is  in  a  condition  immediately  to  take  in  the  home- 
ward cargo.  If  in  this  case  the  policy  on  the  outward  voyage 
had  expired,  and  the  policy  on  the  homeward  voyage  had  not 
attached,  how  was  the  ship-owner  to  secure  himself  an  indem- 
nity during  the  whole  course  of  the  adventure  ? 

Lord  Ellenborough. — What  we  have  to  consider  here  is, 
whether  the  underwriters  on  this  ship,  at  and  from  St.  MichaeVs 
to  England,  be  liable  for  a  loss  happening  in  the  manner  that 
has  been  described.  And  I  am  clearly  of  opinion  that  they 
are  not.  To  be  sure,  while  the  ship  remains  at  the  place,  a 
state  of  repair  and  equipment  may  be  sufficient  which  would 
constitute  unseaworthiness  after  the  commencement  of  the 
voyage.  But  while  in  port  she  must  be  in  such  a  condition  as 
to  enable  her  to  lie  in  reasonable  security  till  she  is  properly 
repaired  and  equipped  for  the  voyage.  She  must  have  once 
been  at  the  place  in  good  safety.  If  she  arrives  at  the  out- 
ward port  so  shattered  as  to  be  a  mere  wreck,  a  policy  on  the 
homeward  voyage  never  attaches.  Such  is  the  present  case.  I 
do  not  remember  any  one  like  it ;  but  the  principles  on  which 
it  must  be  decided  are  perfectly  well  established. 

Plaintiff  nonsuited. 

CJouRT  OF  King's  Bench,  1813. 
WILLIAMS   V.   SHEE. 

(3  Campb.  469.) 
Th»  voyage  :  continuance  of  the  risk,  there  must  be  no  deviation. 

This  was  an  action  on  a  policy  of  insurance  on  goods  by 
the  ship  Sir  Sidney  Smith,  "  at  and  from  London  to  Berbice, 
with  liberty  to  touch  and  stay  at  any  ports  and  places  whatso- 
ever and  wheresoever,  and  for  all  purposes  whatsoever,  particu- 
larly to  land,  load,  and  exchange  goods,  without  being  deemed 
a  deviation." 


o.  XIX.  Williams  v.  Shee.  537 

The  vessel  sailed  from  Portsmouth  on  the  25th  of  Septem- 
ber, 1812,  with  a  fleet  for  the  West  Indies,  under  convoy  of 
his  IMaje^ty's  ship  Narcissus.  They  arrived  off  Madeira  on 
Saturday  the  17th  of  October.  The  Sir  Sidney  Smith  had 
taken  in  a  quantity  of  goods  for  that  island,  which  the  captain 
had  been  ordered  to  land  there,  and  for  which  wines  were  to 
be  sent  on  board.  He  began  to  land  the  goods  as  soon  as  he 
arrived,  but,  not  being  allowed  to  work  on  the  Sunday,  he  had 
not  ffot  the  wines  on  board  till  the  Mondav  at  noon.  The 
Narcissus,  with  the  greatest  part  of  the  fleet,  had  sailed  away 
the  preceding  day,  and  was  then  too  far  off  to  be  overtaken. 
Seven  or  eight  other  ships  belonging  to  the  fleet,  however, 
were  left  behind  at  Madeira,  and  they  all  agreed  to  sail 
together  for  mutual  protection.  With  this  view,  the  Sir  Sid- 
ney  Smith  remained  at  Madeira  till  the  24th  of  October.  She 
finally  parted  company  with  them  off  Barbadoes,  and  on  the 
19th  of  November  was  captured  by  an  American  privateer  on 
her  way  to  Berbice.  The  owner  of  the  goods  insured  was  on 
board  during  the  voyage. 

Garrow,  A.  G.,  contended  that  the  underwriters  were  dis- 
charged, on  two  grounds :  First,  the  ship,  by  putting  into 
Madeira,  and  staying  behind  there  when  the  rest  of  the  fleet 
had  sailed,  had  been  guilty  of  a  deviation ;  secondly,  the  cap- 
tain had  willfully  deserted  the  convoy,  and  as  this  was  done 
with  the  privity  of  the  owner  of  the  goods,  who  was  on  board, 
the  policy  was  vacated. 

Park,  for  the  plaintiff,  insisted,  First,  that  the  ship  had  a 
right  to  put  into  Madeira,  and  to  stop  there  in  the  manner  she 
had  done,  under  the  liberty  given  by  the  policy  to  touch  and 
stay  at  all  ports  and  places  to  land,  load,  and  exchange  goods ; 
secondly,  the  captain  could  not  be  said  willfully  to  have  de. 
serted  the  convoy,  for  he  was  anxious,  if  possible,  to  enjoy  its 
protection  ;  and  the  convoy  had  rather  deserted  him. 

Lord  Ellenborough. — I  am  of  opinion  that  the  under- 
writers are  discharged  on  the  ground  of  deviation.  The  liberty 
in  the  policy  must  be  construed  with  reference  to  the  main 
scope  of  the  voyage  insured.  I  am  inclined  to  think  this  was 
not  a  willful  desertion  of  convoy  within  the  meaning  of  the  act, 
as  the  captain  appears  to  have  acted  honajide,  and  not  to  have 


638  Insurance  :   Fire,  Life,  Marinb.  o.  xix. 

been  aware  of  the  precise  time  when  the  convoy  sailed  away 
from  Madeira.  However,  it  is  unnecessary  to  determine  that 
point  now;  for  upon  well-estabhshed  principles  the  ship  was 
guilty  of  a  deviation  by  putting  into  Madeira  and  voluntarily 
staying  behind  there  for  the  purposes  of  trade  when  the  rest 
of  the  fleet  had  sailed  away  in  the  prosecution  of  the  voyage. 

Plaintiff  nonsuited. 


ClouRT  OF  Common  Pleas,  1870. 
LIDGETT  V.  SECRETA]!T. 

(L.  R.,  5  C.  P.  190.) 

77l«  voyage  :  termination  of  the  risk,  until  moored  twenty-four  hourt  in  good 
safety. 

The  judgment  of  the  court  (Bovill,  C.  J.,  Willes,  J.,  and 
Brett,  J.)  was  delivered  by 

Bovill,  C.  J. — The  policy  in  this  case,  which  was  upon  the 
ordinary  printed  form  of  a  Lloyd's  policy,  was  effected  by  the 
plaintiffs  on  their  iron  sailing  ship  Charlemagne.  The  risk 
was  described  in  writing  to  be  "  at  and  from  London  to  Cal- 
cutta, and  for  thirty  days  after  arrival ; "  and  by  the  other 
terms  of  the  policy  was  to  continue  until  the  said  ship,  etc., 
should  be  moored  at  Calcutta,  Then  followed  the  usual 
printed  words,  "  upon  the  said  ship,  etc.,  until  she  hath  moored 
at  anchor  twenty-four  hours  in  good  safety." 

The  ship  left  London  for  Calcutta,  and  after  sustaining 
damage  at  sea  arrived  in  the  River  Hooghly  in  the  month  of 
October,  1866.  She  was  then  taken  in  tow  by  a  steam  tug, 
and  brought  to  moorings  at  a  usual  place  of  discharge  within 
the  harbor  of  Calcutta,  where  she  came  to  anchor  and  was 
moored  on  the  28th  of  October.  The  captain  gave  the  pilot 
the  usual  certificate  that  she  was  then  properly  moored  and 
left  in  safety. 

She  had  brought  troops  from  England,  who  then  disem- 
barked, and  her  cargo  was  unloaded  and  completely  and  safely 
discharged  by  the  8th  of  November,  with  the  exception  of  two 
hundred  tons  of  iron  which  were  left  in  her  for  ballast. 

On  the  12th  of  November  she  was  taken  from  her  moorings 


0.  XIX.  LiDGETT  V.  Sbcretan.  539 

to  a  dry-dock  for  survey  and  repairs  ;  and,  in  the  course  of  her 
repairs  in  the  dock,  tlie  vessel  accidentally  caught  fire  and  was 
wholly  destroyed  on  the  5th  of  December. 

It  was  found  in  the  case  that  the  vessel  had  sustained  con- 
siderable damage  from  striking  on  a  reef  or  bank  before  she 
reached  Calcutta,  whereby  she  became  much  strained  and 
injured  and  leaky.  Considerable  repairs  were  necessary  ;  and 
she  required  extraordinary  pumping,  which  was  done  at  first 
by  the  troops  on  board  and  afterwards  by  an  engine  and  lascars 
from  the  shore,  to  get  her  clear  of  the  water  which  was  in  one 
of  her  compartments.  She  was  also  injured  in  her  rudder  or 
steering  apparatus,  so  as  materially  to  affect  her  steering  ;  and 
she  was  in  danger  of  breaking  from  her  moorings,  from  the 
currents  and  bore  of  the  Kiver  Hooghly  ;  and,  if  she  had  broken 
away,  the  defect  in  her  steering  apparatus  would  have  further 
endangered  her.  But,  notwithstanding  these  matters,  she  re- 
mained at  her  moorings  for  more  than  twenty-four  hours  as  a 
ship,  though  damaged,  and  safely  discharged  her  cargo. 

Under  these  circumstances,  it  was  contended  on  behalf  of 
the  plaintiffs  that  they  were  entitled  to  recover  as  for  a  total 
loss  by  fire ;  and  on  behalf  of  the  defendant,  that  the  plaintiffs 
were  only  entitled  to  claim  in  respect  of  the  partial  loss  by  sea- 
damage  before  the  arrival  of  the  ship  at  her  moorings,  and  that 
they  were  not  entitled  to  claim  anything  in  respect  of  the  loss 
by  fire,  because  such  fire  occurred  after  the  termination  of  the 
risk  under  the  policy. 

If  the  thirty  days  covered  by  the  policy  are  to  be  reckoned 
from  the  time  of  the  ship's  arrival  at  Calcutta,  either  in  the 
sense  of  arrival  in  the  port,  or  arrival  at  and  being  finally 
moored  at  an  ordinary  place  of  mooring  and  discharge  within 
the  port,  then,  as  the  fire  and  loss  of  the  vessel  did  not  occur 
until  the  thirty -eighth  day  after  she  was  so  moored  at  Calcutta, 
viz.,  the  5th  of  December,  the  loss  would  not  come  within  this 
policy ;  but  if  the  risk  was  extended,  and  continued  beyond 
such  thirty  days,  by  reason  of  the  printed  words  "  until  she 
hath  moored  at  anchor  in  good  safety,"  and  of  the  vessel  hav- 
ing been  moored  in  a  damaged  state  as  described,  then  the  ship 
was  covered  by  this  policy  at  the  time  of  the  fire  on  the  5th  of 
December,  and  the  defendant  would  be  liable  for  the  total  loss 
by  fire. 


540  Insurance  :    Fire,  Life,  Marine.  c.  xix. 

Whether  the  thirty  days  were  in  this  case  to  be  reckoned 
fiujiTi  the  arrival  only  of  the  vessel  at  Calcutta,  or  from  her 
having  been  moored  at  anchor  twenty-four  hours  in  good 
safety,  it  is  not  necessary  to  determine,  because  we  are  all  of 
opinion  that,  even  in  the  latter  view,  the  defendants  are  en- 
titled to  judgment. 

Assuming,  then,  that  the  thirty  days  are  to  be  reckoned 
from  the  time  of  the  ship  being  moored  for  twenty-four  hours 
in  good  safety,  the  question  arises,  what  is  the  meaning  of  those 
words  in  such  a  policy. 

We  are  of  opinion  that  the  meaning  is  not,  as  has  been  con- 
tended, that  the  moorings  are  safe,  but  that  the  words  refer  to 
the  ship  being  in  safety.  The  words  cannot  mean  that  the 
vessel  is  to  arrive  without  any  damage  or  injury  whatever  from 
the  effects  of  the  voyage  ;  otherwise,  the  loss  of  a  mast,  or  even 
a  spar,  a  sail,  or  a  rope,  though  the  vessel  was  perfectly  fit  to 
keep  not  only  the  river,  but  the  sea,  would,  contrary  to  all  the 
ordinary  meaning  of  language,  prevent  her  from  being  con- 
sidered as  in  safety.  So,  on  the  other  hand,  the  words  would 
not,  in  our  opinion,  be  satisfied  by  the  vessel  arriving  and  being 
moored  in  a  sinking  state,  or  as  a  mere  wreck,  or  by  a  mere 
temporary  mooring. 

We  think  also  that  the  mere  liability  to  damage,  whether 
partial  or  total,  during  the  twenty-four  hours,  by  the  occurrence 
of  some  or  all  of  the  perils  insured  against,  cannot  prevent  the 
running  of  the  twenty-four  hours,  because  the  extension  of  the 
period  of  risk  for  twenty-four  hours  after  having  moored  in 
good  safety  clearly  implies  that,  notwithstanding  the  safety 
intended,  the  ship  is  liable  to  partial  or  total  loss  by  the  occur- 
rence of  a  peril  insured  against. 

The  American  decision  upon  that  point,  of  Bill  v.  Mason^ 
6  Mass.  313,  proceeded  on  the  ground  that,  although  the  ship 
was,  during  twenty-four  hours  after  being  moored,  liable  to 
damage  or  total  loss,  she  was  not  in  fact  either  lost  or  in  that 
case  even  damaged.  Where,  on  the  other  hand,  a  ship  arrived 
in  port  in  a  sinking  state,  and  on  being  moored  was  obliged  to 
be  lashed  to  a  hulk  in  order  to  keep  her  afloat  until  the  people 
on  board  were  landed,  and  where  she  sunk  on  being  moved 
toward  the  shore,  it  was  held  that  she  was  not  moored  in 
safety,  because  the  court  considered  that  she  in  fact  arrived  as 


O.  XIX.  LiDGETT    V.  SeOKETAN.  B4:1 

a  wreck,  and  not  as  a  ship.  Shawe  v.  Felton,  2  East,  109.  So, 
where  a  vessel  arriving  in  a  hostile  port  with  simulated  papers 
had  her  papers  immediately  taken  and  her  hatches  sealed  down 
by  the  officers  of  government,  although  she  was  not  formally 
condemned  until  afterwards,  it  was  held  that  she  had  not  been 
mooi'ed  in  safety  for  twenty-four  hours,  because  she  was  in 
effect  within  the  twenty-four  hours  taken  from  her  owners  by 
the  foreign  government.  Tlonieyer  v.  Lushington^  15  East,  46. 
Nor  was  a  vessel  which  had  been  for  a  short  period  moored  to 
a  wharf,  but  within  twenty-four  hours  was  ordered  into  quaran- 
tine, and  whilst  there,  but  more  than  twenty-four  hours  after 
the  original  temporary'  mooring,  was  lost  by  a  peril  insured 
against,  considered  to  have  moored  in  good  safety,  because,  as 
it  would  seem,  she  had  not,  before  the  loss  in  respect  of  which 
the  claim  was  made,  been  finalh^  moored  at  the  ordinary  place 
of  mooring.     Wdjyles  v.  Eames^  2  Str.  1243. 

Where  a  vessel  after  being  moored  remained  in  actual 
safety  as  a  ship  for  twenty-four  hours,  and  so  that  during  those 
twenty-four  hours  her  owners  had  complete  and  undisturbed 
possession  of  her,  but  afterwards  she  was  seized  in  consequence 
of  the  master  having  smuggled  before  her  arrival,  it  was  held 
that  the  terms  of  the  policy  were  satisfied,  and  that  the  loss  by 
the  seizure  was  a  loss  after  the  termination  of  the  risk.  Lochyer 
V.  Offley,  1  T.  R.  252.  In  that  case,  Willes,  J.,  in  delivering 
the  judgment  of  the  court,  said  (1  T.  R.  at  p.  261) :  "  There 
must  be  some  certain  and  reasonable  limitation  in  point  of  time 
laid  down  by  the  court  when  the  insurer  shall  be  released  from 
his  engagement.  If  he  be  liable  for  a  month,  he  may  be  for  a 
year,  and  so  on.  And  we  all  think  that  the  law  on  insurances 
would  be  left  unsettled  and  in  much  confusion  if  any  other  time 
were  suggested  than  that  prescribed  by  the  policy  ;  viz.,  the 
continuance  of  the  voyage  and  the  ship's  being  moored  twenty- 
four  hours  in  safety." 

In  the  present  case,  the  vessel,  though  considerably  dam- 
aged and  leaky,  and  with  one  compartment  full  of  water, 
existed  as  a  ship  at  the  time  of  her  arrival,  and  she  was  able  to 
keep  afloat  and  did  keep  afloat  as  a  ship  for  more  than  twenty- 
four  hours  after  being  moored,  by  exerting  the  means  within 
the  power  of  the  captain.  She  arrived  and  moored  at  the 
ordinary  place  for  unloading,  and  was  so  moored  as  a  ship  in 


642  Insurance:   Fire,  Life,  Marine.  o.  xix. 

the  possession  or  control  of  her  owners  for  more  than  twenty- 
four  hours ;  and  she  remained  as  a  ship  and  in  possession  of 
her  owners  for  more  than  thirty  days  after  the  lapse  of  the 
twenty-four  hours  before  described,  and  until  the  time  of  the 
fire  by  which  she  was  totally  lost. 

If  the  underwriters  are  liable  beyond  thirty  days  from  her 
being  so  moored  for  twenty-four  hours,  it  is  difficult  under  such 
circumstances  to  see  when  the  liability  is  to  end.  We  think 
the  only  safe  rule  in  this  case  is  to  hold,  that,  after  the  expira- 
tion of  thirty  days  from  the  arrival  and  mooring  of  the  vessel, 
and  her  having  remained  as  a  vessel,  and  in  the  possession  or 
control  of  her  owners,  though  not  sound,  for  twenty-four  hours, 
the  underwriters  were  not  responsible.  We  are,  therefore,  of 
opinion  that  there  was  not  a  total  loss  within  the  period  of  risk 
covered  by  this  policy,  and  that  our  judgment  should  be  for 
the  defendant. 

Judgment  for  the  defendant. 


CHAPTER   XX. 

elauses  of  the  marine  policy — concluded. 
House  of  Lords,  1887. 

THAMES  &  MERSEY  MARINE  INS.  00.  r. 
HAMILTON. 

(L.  R.,  12  App.  Cas.  484.) 
Perils  insured  against. 

Appeal  from  a  decision  of  the  Court  of  Appeal  upon  a 
special  case  stated  in  an  action  brought  by  the  respondents 
against  the  appellants,  the  insurance  company,  to  recover  for  a 
loss  under  a  policy. 

The  policy  sued  on  was  a  time  policy  on  the  steamship 
Inchmaree  for  twelve  months,  from  the  20th  of  August,  1883, 
to  the  20th  of  August,  1884 ;  and  the  subject-matter  of  insur- 
ance, "  the  hull,  masts,  spars,  sails,  boats,  materials,  and  all 
stores,  valued  at  £20,000  ;  and  machinery,  shafting,  propeller, 
boilers,  and  connections,  including  donkey-engine  and  boilers, 
pumps,  and  all  connections,  valued  at  £11,000." 

On  the  2d  of  March,  1884,  the  Inchmaree  was  at  anchor  off 
Diamond  Island,  awaiting  orders,  and  for  the  purposes  of  the 
voyage  it  was  necessary  to  pump  up  the  main  boilers,  by  means 
of  a  donkey -pump  and  engine,  in  the  usual  way.  A  pipe  led 
from  the  donkey-pump  to  the  boilers,  and  at  its  junction  with 
one  of  the  boilers  there  was  a  check  valve,  capable  of  being 
opened  or  closed  by  a  screw,  which  ought  to  have  been  kept 
open  and  clear  when  the  boilers  were  being  pumped  up.  This 
valve  had  either  been  left  closed  or  had  become  salted  up  when 
the  donkey-pump  was  set  to  work,  off  Diamond  Island,  so  that 
the  water  could  not  pass  into  the  boiler.  The  consequence 
was,  that,  when  the  donkey-pump  was  set  to  work,  the  pipes 
and  water-chamber  in  the  donkey-pump,  and  the  air-chamber 


644  Insurance  :    Fire,  Life,  Marine.  c.  xx. 

therein,  became  overcharged,  and  the  water  was  forced  up 
into  the  air-chamber,  which  in  consequence  split,  and  the 
pump  was  thereby  damaged. 

It  was  admitted,  for  the  purposes  of  the  case,  that  the 
check-valve  was  either  allowed  to  remain  closed  or  become 
salted  up  by  the  negligence  of  one  of  the  engineers,  or  was 
accidentally  salted  without  being  noticed,  though  reasonable 
care  was  taken  by  the  engineers.  It  was  also  admitted  that 
the  closing  or  salting  up,  and  accident,  were  not  due  to  ordi- 
nary wear  and  tear. 

The  parties  were  unable  to  agree  as  to  whether  there  was 
negligence  in  allowing  the  check-valve  to  remain  closed  or  to 
become  salted  up  ;  but  as  the  plaintiffs  contended  that  the 
defendants  were  liable,  whether  there  was  negligence  or  not, 
it  was  agreed  to  leave  that  question  for  trial  (if  material)  after 
the  decision  of  the  case. 

The  questions  stated  for  the  opinion  of  the  court  were, 
whether  the  defendants  were  liable  under  the  policy  in  respect 
of  the  loss,  (1)  if  it  could  have  been  avoided  by  proper  care, 
and  occurred  through  negligence ;  (2)  if  it  occurred  accident- 
ally, without  negligence. 

The  Queen's  Bench  Division  gave  judgment  for  the  plain- 
tiffs, and  this  judgment  was  affirmed  by  the  majority  of  the 
Court  of  Appeal  (Lindley  and  Lopes,  L.  JJ."*  Lord  Esher,  M.R., 
dissenting. 

Lord  Halsburt,  L.  C. — My  Lords,  in  this  case  a  policy  of 
marine  insurance  for  twelve  months  was  effected  upon,  among 
other  things,  a  pump  on  board  the  Inchtnaree  steamer. 

The  adventures  and  perils  which  the  capital  stock  and 
funds  of  the  defendant  company  were  made  liable  to  by  the 
policy  of  insurance  were,  of  the  seas,  men-of-war,  fire,  enemies, 
pirates,  rovers,  thieves,  jettisons,  letters  of  mart  and  counter- 
mart, surprisals,  takings  at  sea,  arrests,  restraints  and  detain- 
ments of  all  kings,  princes,  and  people  of  what  nation,  condi- 
tion, or  quality  soever,  barratry  of  the  master  and  mariners, 
and  of  all  other  perils,  losses,  and  misfortunes,  that  had  or 
should  come  to  the  hurt,  detriment,  or  damage  of  the  aforesaid 
subject-matter  of  insurance,  or  any  part  thereof. 

It  is  certain  that  a  loss  or  misfortune  has  happened  to  the 


c.  XT.      Thames  &  Mersey  Mar.  Ins.  Co.  v.  Hamilton.      545 

pump  while  the  pump  was  being  used  for  the  purpose  of  filhng 
the  boilers  of  the  Inchmaree,  and  the  sole  question  is,  whether 
the  loss  or  misfortune  which  did  happen  was  one  of  the  losses 
or  misfortunes  against  which  the  insuring  company  agreed  to 
indemnify  the  owners  of  the  Inchmaree.  If  understood  in  their 
widest  sense,  the  words  are  wide  enough  to  include  it ;  but  two 
rules  of  construction  now  firmly  established  as  part  of  our  law 
may  be  considered  as  limiting  those  words.  One  is  that  words, 
however  general,  may  be  limited  with  respect  to  the  subject- 
matter  in  relation  to  which  they  are  used.  The  other  is,  that 
general  words  may  be  restricted  to  the  same  genus  as  the 
specific  words  that  precede  them. 

There  is,  perhaps,  a  third  consideration  which  cannot  be 
overlooked,  and  that  is,  that  where  the  same  words  have  for 
many  years  received  a  judicial  construction,  it  is  not  unreason- 
able to  suppose  that  parties  have  contracted  upon  the  belief 
that  their  words  will  be  understood  in  what  I  will  call  the 
accepted  sense.  And  it  is  to  be  remembered  that  what  courts 
have  to  do  in  construing  all  written  documents  is  to  reach  the 
meaning  of  the  parties  through  the  words  they  have  used. 

Now,  the  facts  here  are  very  simple :  a  part  of  the  pump 
was  burst  because  a  valve  which  should  have  let  the  water  into 
the  boiler  was  stopped  up  while  the  pump  was  being  worked 
by  a  donkey-engine.  On  the  one  side,  it  is  said  that  filling  the 
boiler  was  necessary  to  enable  the  ship  to  prosecute  her  voy- 
age; on  the  other,  it  is  said  that  the  accident,  peril,  or  misfor- 
tune had  nothing  to  do  with  the  sea,  and  was  in  no  sense  of 
the  like  kind  with  any  of  the  perils  or  misfortunes  specifically 
enumerated. 

In  the  long  line  of  cases  quoted  at  the  bar,  there  was  only 
one  (with  which  I  will  attempt  to  deal  presently)  which  enun- 
ciated any  different  principles  of  construction  from  those  I 
have  endeavored  to  set  forth  above,  although  I  think  there  is 
some  difficulty  in  reconciling  the  facts  with  respect  to  which 
some  of  them  are  decided  with  the  principle  upon  which 
they  profess  to  be  decided ;  conspicuously  I  think  Devaux  y, 
'T Anson  5  (Bing.  N.  C.  519,)  where  Tindal,  C.  J.,  rests  upon 
authorities  which,  as  applicable  to  the  particular  facts  of  the 
cases  to  which  he  refers,  hardly  support  the  decision  there 
arrived  at. 
85 


546  Insuranck  :    Fire,  Life,  Marine.  o.  xx. 

The  gTcat  difficulty  1  have  had  in  this  case  is  the  decision 
of  Lord  Selbourne,  L.  C,  and  Cockburn,  C.  J.,  in  the  case  of 
West  India  and  Panama  Telegraph  Company  v.  Home  and 
Colonial  Marine  Insurance  Co.,  6  Q.  B.  D.  5L  I  cannot  agree 
with  the  Master  of  the  Rolls  that  that  case  does  not,  as  matter 
of  reasoning,  cover  the  present  case.  With  the  utmost  respect, 
I  can  draw  no  real  distinction  between  the  explosion  of  the 
boiler  and  the  bursting  of  the  air-chamber  of  the  pump,  nor 
can  any  real  distinction  depend  upon  whether  it  was  steam 
generated  by  fire  which  caused  the  explosion,  or  air  and  water 
forced  into  the  chamber  by  ordinary  mechanical  action.  But 
before  your  Lordships  that  case  is  open  to  review,  and  I  cannot 
think  that  that  case  is  reconcilable  with  the  principles  upon 
which  policies  of  marine  insurance  have  hitherto  been  con- 
strued. It  introduces  analogy  as  the  guide  by  which  you  are 
to  ascertain  the  genus  to  which  the  different  species  are  to  be 
attributed ;  so  that,  in  the  future,  one  must  introduce  as  the 
true  exposition  of  general  words  not  the  genus  you  find  as 
applicable  to  the  species  enumerated,  but  any  analogous  genus. 
Sea  perils,  or  the  like,  become  enlarged  into  perils  whose  only 
connection  with  the  sea  is  that  they  arise  from  machinery 
which  gives  motive  power  to  ships. 

I  cannot  think  that  even  were  the  analogy  perfect — which 
I  do  not  think  it  is — this  is  a  satisfactory  mode  of  ascertaining 
what  the  parties  meant  by  the  words  they  have  used ;  and,  as 
I  have  said,  this  is  the  real  function  of  a  court  in  construing  an 
instrument.  It  might  be  reasonable  for  the  parties  to  provide 
for  such  a  peril,  and  one  knows  that  "  dangers  of  and  incident 
to  steam  navigation  "  are  words  which  have  been  used  to  pro- 
vide for  such  casualties.  But  I  cannot  think  that  such  casual- 
ties were  in  the  contemplation  of  the  parties  when  using  the  old 
familiar  words  of  this  policy.  I  think  the  subject-matter,  marine 
risks,  limits  the  meaning  of  the  general  words.  I  think  the  genus, 
"  perils  of  the  sea,"  limits  the  meaning.  I  think  the  meaning 
attributed  to  these  words  for  more  than  half  a  century,  by  decis- 
ion, makes  it  probable  that  the  parties  used  them  in  that  ac- 
cepted sense.  I,  therefore,  think  the  judgment  of  the  Court  of 
Appeal  wrong,  and  I  move  your  Lordships  that  it  be  reversed. 

Lord    Bramwell. — My    Lords,    I    cannot   agree    with    the 


0.  XX.    Thames  &  Mersey  Mar.  Ins.  Co.  v.  Hamilton.        547 

judgment  in  this  case.  The  donkey-engine  was  insured.  The 
adventures  and  perils  which  the  defendants  were  to  make  good 
specified  a  great  many  particular  perils,  and  "all  other  perils, 
losses,  and  misfortunes  that  have  or  shall  come  to  the  hurt, 
detriment,  or  damage  of  the  aforesaid  subject-matter  of  insur- 
ance, or  any  part  thereof."  Words  could  hardly  be  more  ex- 
tensive, and  if  the  question — I  ought  to  say  a  question  on 
them — arose  for  the  first  time,  T  might,  perhaps,  give  them 
their  natural  meaning,  and  say  they  included  this  case.  But 
the  question  does  not  arise  for  the  first  time.  It  has  arisen 
from  tjme  to  time  for  centuries,  and  a  limitation  has  always 
been  put  on  the  words  in  question. 

Definitions  are  most  difficult,  but  Lord  Ellenborough's  seems 
right :  "All  cases  of  marine  damage  of  the  like  kind  with  those 
specially  enumerated,  and  occasioned  by  similar  causes,"  I 
have  had  given  to  me  the  following  definition  or  description  of 
what  would  be  included  in  the  general  words :  "  Every  acci- 
dental circumstance  not  the  result  of  ordinary  wear  and  tear, 
delay,  or  of  the  act  of  the  assured,  happening  in  the  course  of 
the  navigation  of  the  ship,  and  incidental  to  the  navigation, 
and  causing  loss  to  the  subject-matter  of  insurance."  Probably 
a  severe  criticism  might  detect  some  faults  in  this.  There  are 
few  definitions  in  which  that  could  not  be  done.  I  think  the 
definition  of  Lopes,  L.  J.,  in  Pandorf  y.  Hamilton.,  (16  Q.  B.  D. 
629),  very  good  :  "  In  a  seaworthy  ship,  damage  to  goods  caused 
by  the  action  of  the  sea  during  transit  not  attributable  to  the 
fault  of  anybody,"  is  a  damage  from  a  peril  of  the  sea. 

I  have  thought  that  the  following  might  suffice :  "  All 
perils,  losses,  and  misfortunes  of  a  marine  character,  or  of  a 
character  incident  to  a  ship  as  such." 

I  put  it  forward  with  distrust,  but  it  would  comprehend  all 
the  cases  cited  where  the  assured  has  recovered,  save  perhaps 
the  Panama  case.  For  example,  it  would  include  the  case 
of  the  ship  blown  over  while  in  dock,  of  the  ship  damaged  by 
its  moorings  giving  away,  of  the  ship  fired  into  by  a  ship.  It 
would  not  include  the  cases  put  by  Lord  Esher,  nor  the  case  I 
put  of  the  captain  seized  with  giddiness  dropping  the  chronom- 
eter into  the  hold ;  nor  would  it  include  the  present  case.  The 
damage  to  the  donkey-engine  was  not  through  its  being  in  a 
ship  or  at  sea.     The  same  thing  would  have  happened  had  the 


548  Insurance  :    Fire,  Life,  Marine.  c.  ix 

boilers  and  engines  been  on  land,  if  the  same  mismanagement 
had  taken  place.  The  sea,  waves,  and  winds  had  nothing  to  do 
with  it. 

As  a  matter  of  principle  and  reasoning,  I  think  the  decision 
wrong.  I  think  the  judgment  in  the  West  India  and  Panama 
Telegraph  Company  v.  Home  and  Colonial  Marine  Insurance 
Company  wrong  on  the  reasoning  I  have  used.  With  most 
sincere  respect,  though  it  is  true  that  what  the  winds  are  to  a 
sailing  vessel,  steam  is  to  a  steamer,  that  does  not  decide  the 
question,  for  it  is  not  every  damage  to  sails  that  would  be  cov- 
ered by  the  policy.  Suppose  damage  by  rats  or  mildew  to 
spare  sails.  As  to  Lord  Esher's  judgment  in  that  case,  I  con- 
cur in  his  criticism  on  it  in  the  present  case.  And  I  agree  with 
Lopes,  L.  J.,  that  the  word  "  fire  "  in  the  policy  will  not  sus- 
tain that  judgment.  Tlie  Lord  Justice  puts  the  case  of  a  spar 
falling  on  the  deck  wiiile  getting  under  sail,  and  being  broken, 
and  says  it  would  be  within  the  policy.  Perhaps;  but  if  it 
would,  it  would  be  because  it  was  a  loss  in  navigation,  a  loss 
which  could  not  have  happened  except  on  ship.  But  suppose  the 
spar  was  being  used  to  erect  an  awning  on  deck  to  give  shelter 
to  dancers  or  the  like,  and  was  broken,  the  case  would  not  be 
covered  by  the  policy.  It  would  not  be  a  marine  loss,  not  a 
loss  with  which  the  sea,  or  navigation,  or  the  ship  as  a  ship, 
had  anything  to  do. 

I  do  not  like  cuttino^  down  the  natural  meaning  of  words : 
there  is  always  great  difficulty  in  saying  what  should  be  sub- 
stituted. But  it  is  admitted  that  some  limit  must  be  put  on 
those  in  question  here.  I  think  a  proper  limit  would  exclude 
this  loss.  So  that  the  judgment  of  the  Master  of  the  Rolls  is, 
I  think,  right,  and  that  of  the  other  judges  wrong,  and  their 
decision  should  be  reversed. 

Order  appealed  from  ^  and  the  judgment  of  the 
Queen\s  Bench  Division  reversed. 


o.  XJS..  Brown  v.  St.  Nicholas  Ins.  Co.  549 


y 


CouBT  OF  King's  Bench,  1795. 
GREEN  V.  ELMSLIE. 

(1  Peake,  N.  P.  Cas.  278.) 
Capture  :  proxinvite  cause  of  loss. 

This  action  was  on  a  policy  of  insurance  on  the  ship  F^y, 
from  Exeter  to  London.  The  insurance  was  against  capture 
only. 

The  ship,  while  on  her  voyage,  was  driven  by  a  hard  gale 
of  wind  on  the  coast  of  France,  and  was  there  captured  by  the 
enemy  ;  she  did  not  receive  any  damage  from  the  wind. 

Erskine  contended  that  this  was  a  loss  by  the  perils  of  the 
seas,  and  not  by  capture,  and  that  therefore  the  defendant  was 
not  liable  on  this  policy. 

But  Lord  Kenyon  said,  the  case  was  too  clear  to  admit  ot 
argument ;  this  was  clearly  a  loss  by  capture,  for  had  the  ship 
been  driven  on  any  other  coast  but  that  of  an  enemy,  she 
would  have  been  in  perfect  safety. 

Verdict  for  the  plaintiffs. 

New  York  Court  of  Appeals,  1874:. 
BROWN  V.  ST.   NICHOLAS   INS.   CO. 

(61  N.  Y.  332.) 

Proximate  cause.     Conjunction  of  two  causes,  one  covered  hy  policy,  namdy, 
stress  of  weather  ;  the  other  excepted  by  policy,  namely,  ice. 

This  action  was  brought  to  recover  the  amount  of  a  policy 
of  marine  insurance  issued  in  December,  1863,  by  the  defend- 
ant upon  a  cargo  of  hay  laden  on  the  canal-boat  George  R. 
Hale,  on  a  voyage  from  New  York  to  the  city  of  Washington. 

The  polic}"  contained  a  clause  known  as  an  '"  ice  clause," 
in  the  following  terms:  "It  is  understood  and  agreed  that  if 
any  boats,  the  cargo  of  which  is  covered  by  this  policy,  are 
prevented  or  detained  by  ice,  or  the  closing  of  navigation,  from 
terminating  the  trip,  then  in  such  case  the  polic}^  shall  cease  to 
attach  upon  said  cargo,  and  this  company  shall  return  the  pre- 
mium for  the  unexpired  portion  of  said  trip."     There  was  also 


550  In8uranoe  :    Fire,  Life,   Makinb.  o.  xi, 

a  clause  that  the  insured  vessel  "  could  touch  and  stay  at  any 
ports  or  places  if  thereunto  obliged  by  stress  of  weather,  or 
other  unavoidable  accident,  without  prejudice  to  this  insurance." 
The  canal-boat  with  her  cargo  left  New  York  in  December, 
1863,  and  proceeded  by  way  of  the  canals  with  a  tow  of  other 
boats  to  Philadelphia.  She  left  Philadelphia  January  1,  1864, 
in  a  tow  of  about  twenty-five  boats,  towed  by  four  or  five 
steam-tugs.  They  proceeded  down  the  Delaware  River,  on 
their  way  to  the  Chesapeake  and  Delaware  canals.  In  the 
afternoon  the  wind  began  to  blow,  increasing  to  a  heavy  gale ; 
during  the  gale,  the  tugs  were  separated  from  the  canal-boats, 
and  the  latter  were  drifted  ashore  on  the  same  night,  at  a  place 
called  "  Church's  Landing."  This  was  on  the  New  Jersey  side 
of  the  river,  about  fifteen  miles  from  Philadelphia.  "When  she 
went  ashore  there  was  some  ice  in  the  river,  but  not  enough  to 
interfere  with  navigation.  During  the  night  it  formed  around 
the  boats  to  such  an  extent  that  the  tugs  could  not  reach  them 
the  next  morning,  though  an  effort  to  do  so  Avas  made.  The 
boat  Hale  continued  frozen  in  until  a  thaw  occurred,  January 
y.8th  or  19th.  After  the  thaw,  on  the  morning  of  the  20th, 
the  wind  and  ice  forced  the  boat  upon  another  canal-boat  in 
/)uch  a  way  that  when  the  tide  went  down  she  broke  in  two 
•ind  sank.  Four  or  five  days  afterwards  the  remaining  canal- 
boats  proceeded  under  tow  by  way  of  the  canals  to  Washing- 
ton, where  they  arrived  safely  with  their  cargoes.  The  channel 
of  the  river  was  open  during  the  time  that  the  boats  lay  ashore, 
though  encumbered  by  floating  ice.  There  was  nothing  but 
the  action  of  the.  gale  to  prevent  the  boats  from  reaching  the 
canal  at  Delaware  city,  on  the  morning  of  January  2d.  After 
the  wreck,  the  plaintiffs  abandoned  the  cargo  to  the  insurers 
(defendants),  and  claimed  a  total  loss.  The  cargo  was  injured 
by  contact  with  the  water  to  more  than  one-half  its  value. 

On  the  trial,  the  judge  charged  the  jury  that  the  stress  of 
weather,  by  driving  the  vessel  ashore,  must  be  regarded  as  the 
primary  cause  of  the  loss  of  the  cargo.  To  this  proposition 
exception  was  taken  by  the  defendants. 

DwiGHT,  C. — The  sole  question  in  this  case  concerns  the 
proper  construction  of  a  clause  in  a  marine  insurance  policy, 
commonly  termed  an  "  ice  clause,"     It  will  be  observed  that 


a  ix.  Brown  v.  St.  Nicholas  Ins.  Co.  551 

this  is  not  the  ordinary  case  of  a  warranty  operating  as  a 
condition  precedent  to  the  attaching  of  the  policy.  It  rather 
assumes  that  the  policy  has  attached  and  provides  for  its  cessa- 
tion. It  is  rather  in  the  nature  of  a  condition  subsequent.  It 
recognizes  the  validity  of  the  policy,  and  the  liability  of  the 
insurers  up  to  the  time  when  their  responsibility  terminates,  on 
the  happening  of  the  prescribed  events — prevention  or  deten- 
tion by  ice,  or  the  closing  of  navigation,  from  terminating  the 
voyage.  Until  these  events  happen,  the  insurers  are  clearly 
liable  for  all  losses  occurring  from  the  ordinary  perils  of  the  sea. 
When  they  transpire,  the  policy  ceases  to  have  binding  effect. 

The  only  point  to  be  considered  is,  whether  the  boat,  in  the 
present  case,  was  prevented  or  detained  by  ice  from  terminat- 
ing the  voyage.  Was  the  true  cause  of  detention,  etc.,  the  ice 
or  the  stress  of  weather?  If  the  latter,  the  insurers  are  still 
liable,  as  the  main  clauses  of  the  policy  are  applicable ;  if  the 
former,  the  insurers  are  discharged. 

The  true  construction  of  these  words  is  to  be  sought  in  the 
ordinary  rules  which  control  the  interpretation  of  written 
instruments.  They  are  not  ambiguous,  and  need  no  aid  from 
the  testimony  of  experts.  Their  signification  is  purely  a  ques- 
tion of  law.  ^i^.  Luke's  Home  v.  Asso.  for  Lid.  Femules^  52 
K  Y.  191. 

It  will  be  observed  that  there  are  two  general  modes  in 
which  it  is  anticipated  the  boat  may  be  precluded  from  accom- 
plishing its  voyage — ice  or  the  closing  of  navigation.  These 
causes  may  operate  either  temporarily  or  permanently. 
Whether  there  was  a  delay  by  the  presence  of  ice,  or  a  termi- 
nation of  the  voyage  by  the  closing  of  navigation,  the  insurers 
were,  in  either  case,  to  be  discharged.  It  is  plain  that  either 
of  these  causes  must  operate  in  the  same  general  manner ;  that 
is,  as  the  efficient  cause  of  detention  or  breaking  up  of  the 
voyage. 

The  facts  of  the  present  case  showed  that  there  was  no 
closing  of  navigation,  and  no  detention  of  boats  by  ice  along 
the  usual  channels  of  navigation.  A  heavy  gale  drove  the 
boat,  on  which  the  cargo  in  question  was  carried,  on  to  the 
shore,  so  that  she  was  stranded.  The  detention  caused  by  her 
being  driven  out  of  her  course  was  due,  beyond  all  question, 
to  the  gale.     Her  detention  on  tlie  shore  until  the  ice  formed 


552  Insuranck  :    Fire,  Life,  Marine.  c.  xx. 

around  her  was  due  to  a  consequence  of  the  gale — stranding. 
Did  that  cause  cease  to  operate  because  ice  formed  in  front  of 
the  boat  and  between  her  and  the  channel  ?  Is  it  not,  rather, 
the  true  view,  that  the  presence  of  the  ice  prevented  the  removal 
of  the  cause  which  createtl  detention,  and  was  slowly  working 
the  destruction  of  the  cargo  ? 

What  is  the  proximate  cause  of  the  loss  ?  This  is  always  a 
difficult  question  to  determine  in  the  case  of  a  conjunction  of 
causes.  The  policy  must  have,  in  settling  this  question,  a  rea- 
sonable interpretation,  with  a  view  to  effectuate  the  intention  of 
the  parties.  The  words  "detained  or  prevented  by  ice"  must 
mean  detention  in  the  ordinary  course  of  navigation.  The 
contract  contemplated  that  the  canal-boat  should  be  moved  by 
a  tug.  This  motive-power  was  carried  away  by  a  storm,  and 
ice  subsequently  formed  so  as  to  prevent  it  from  returning. 
The  efficient  cause  of  the  detention  wae  the  loss  of  the  motive- 
power  through  the  stress  of  the  storm,  and  the  ice  acted  only 
as  an  obstacle  to  its  restoration.  Suppose  that  the  tug,  after 
separation,  had  been  captured  by  an  enemy  ?  Would  the  loss 
of  the  canal-boat  have  been  due  to  the  capture  of  the  tug  ? 
Would  not  the  true  cause  of  its  loss  have  been  the  storm  which 
drove  the  two  vessels  asunder,  and  left  the  canal-boat  at  the 
mercy  of  the  elements  ? 

A  well-known  writer  on  the  law  of  marine  insurance  has 
laid  down  two  rules  applicable  to  this  subject,  which  appear  to 
be  sound,  and  which  were  approved  by  the  Supreme  Court  of 
the  United  States  in  Insurance  Co.  v.  Transportation  Co.^  12 
Wallace,  196.  These  rules  are  as  follows  :  "1.  In  case  of  the 
concurrence  of  two  causes  of  loss,  one  at  the  risk  of  the  insured 
and  the  other  insured  against,  or  one  insured  against  by  A  and 
the  other  by  B,  if  the  damage  by  the  perils,  respectively,  can 
be  discriminated,  each  party  must  bear  his  proportion.  2. 
Where  different  parties,  whether  the  insured  and  the  under- 
writers ui  different  underwriters,  are  responsible  for  different 
causes  of  loss,  and  the  damage  by  each  cannot  be  distinguished, 
the  party  responsible  for  the  predominating  efficient  cause,  or 
that  by  which  the  operation  of  the  other  is  directly  occasioned 
as  being  merely  incidental  to  it,  is  liable  to  bear  the  loss." 
1  Phil,  on  Ins.,  §§  1136,  1137.  The  present  case  falls  under 
the  second  of  these  rules.     The  predominating  efficient  cause 


o.  XX.  Brown  v.  St.  Nicholas  Ins.  Co.  553 

is  the  storm.  It  is  well  settled  that  an  insurer  is  liable  for  all 
the  consequences  directly  resulting  from  a  peril  insured  against, 
as  where  a  boat  is  lost  after  a  storm  has  ceased,  in  consequence 
of  damasre  done  during;  a  storm.     2  Pars,  on  Mar.  Law,  261. 

Suppose  that  in  the  present  case  a  general  of  an  army  had 
laid  down  a  bridge  between  the  canal-boat  as  she  lay  on  shore, 
and  the  tusf  in  the  channel,  would  the  detention  have  been  due 
to  the  bridge  or  the  stranding  ?  If  a  man's  house  were 
besieged  by  burglars,  and  his  friends  were  prevented  from 
relieving  him  by  the  sudden  closing  of  a  gate  by  some  distinct 
act  of  persons  unconnected  with  the  burglar}^  would  his  deten- 
tion in  his  house  be  due  to  the  closing  of  the  gate,  or  rather  to 
the  act  of  the  burglars  as  "  the  predominating  efficient  cause  "  ? 
Such  an  inquiry  was,  to  some  extent,  involved  in  Tonides 
V.  Universal  Marine  Ins.  Co.,  14  C.  B.  N.  S.  259.  The  ship 
insured  against  the  perils  of  the  sea  went  ashore.  The  light  at 
Cape  Hatteras,  North  Carolina,  existing  there  for  many  years, 
and  visible  for  twenty-five  miles  at  sea,  had  been  extinguished 
by  the  Confederate  authorities  to  harass  the  United  States 
shipping.  The  question  was  whether  the  cause  of  the  loss  was 
the  peril  of  the  sea,  or  the  absence  of  the  light.  Byles,  J., 
in  giving  his  opinion,  said  :  "  The  original  meritorious  cause, 
and  in  popular  language  the  cause  of  the  loss,  was  the  captain's 
being  out  of  his  reckoning.  He  was  some  fifty  miles  to  the 
westward  of  his  course,  without  knowing  it.  The  absence  of 
the  light  was  merely  the  absence  of  an  extrinsic  saving  power. 
Could  that  be  said  to  be  the  cause  of  the  ship's  destruction  'i 
Suppose  a  man  throws  himself  into  the  Serpentine,  and  the 
means  of  rescuing  him  are  not  at  hand,  and  he  is  drowned,  could 
it  be  said  that  the  man  is  drowned  because  of  the  absence  of 
the  saving  power  ?  "  In  the  case  at  bar,  the  detention  com- 
menced with  the  stranding.  That  detention  and  its  concom- 
itants never  ceased  until  the  boat  was  destroyed.  That  was 
the  only  detention  existing ;  and  the  failure  of  the  tugs  to 
reach  the  boat  was,  in  the  words  of  Byles,  J.,  the  "  absence 
of  an  extrinsic  saving  power."  Any  other  view  would  lead  to 
mere  speculative  considerations.  Suppose  that  the  intervening 
ice  had  not  formed,  what  certainty  is  there  that  the  canal-boat 
could  have  been  got  off  from  the  shore  so  as  to  have  pursued 
her  voyage  ?     The  detention  occasioned  by  the  stranding  never 


554  Insurance  :    Fire,  Life,  Marinb,  o.  li. 

ceased  until  the  dangers  of  the  thaw  came  on,  which,  in  com- 
bination with  the  existing  causes  growing  out  of  the  stranding, 
led  to  her  destruction.  This  test  has  been  suggested  in  one  of 
the  cases  :  Suppose  that  an  insurance  had  been  made  in  another 
company  against  the  very  cause  of  loss  excluded  in  this— for 
example,  the  boat  is  insured  "  against  detention  by  ice " — 
could  there  have  been  a  recovery  on  the  facts  proved  at  the 
trial?  "Would  it  not  have  been  successfully  objected,  that  the 
loss  was  occasioned  by  the  stranding,  and  that  the  detention 
by  the  ice  was  merely  incidental  to  that  ? 

Another  view  of  the  case  may  be  suggested.  The  voyage 
terminated  with  the  stranding.  There  was  never  a  moment 
after  that  occurrence  in  which  it  was  resumed.  Accordingly 
the  formation  of  the  ice  could  not  properly  be  said  to  detain 
a  boat  whose  voyage  before  that  formation  had  already  come 
to  an  end.  In  BondreU  v.  Hentigg,  Holt  N.  P.  C,  149,  the 
facts  were,  that,  of  the  goods  insured  against  a  peril  of  the  sea, 
a  part  were  lost  and  a  part  got  on  shore.  This  last  portion 
was  plundered  and  destroyed  by  the  inhabitants  of  the  coast, 
so  that  no  part  of  it  ever  got  to  the  possession  of  the  insured. 
Gibbs,  C.  J.,  held  this  to  be  a  case  of  total  loss.  The  reason 
given  is,  that  the  portion  of  the  goods  saved  from  the  wreck, 
though  got  on  shore,  never  came  again  into  the  hands  of  the 
owners.  The  total  loss  was  the  proximate  result  of  the  wreck. 
This  case  was  approved  in  lonides  v.  Univ.  Mar.  Ins.  Co. 
supra.  In  Hahn  v.  Corhett,  2  Bing.  205,  goods  were  insured 
"free  from  capture  and  seizure."  The  vessel  was  stranded  oflf 
Maracaibo,  and  part  of  the  cargo  damaged,  and  both  vessel  and 
cargo  seized  by  royalists,  then  in  possession  of  the  coast,  as 
prize.  There  was  held  to  be  a  total  loss,  both  of  the  damaged 
and  undamaged  goods,  by  a  peril  of  the  sea.  The  loss  was 
deemed  to  take  place  at  the  time  of  the  stranding  as  to  all  the 
goods.  Best,  C.  J.,  in  delivering  his  opinion,  said  it  was  clear 
that  the  goods  would  never  have  moved,  as  the  ship  never 
moved.  It  was  as  if  they  had  been  cast  on  a  rock  and  were 
completely  out  of  reach.  To  the  same  effect  is  the  language 
of  the  court  in  Magoun  v.  N.  E.  Mar.  Ins.  Co.  (1  Story,  164, 
165,)  where  it  is  laid  down,  that  if  there  be  a  capture,  and  before 
the  vessel  is  delivered  from  that  peril  she  is  afterward  lost  by 
fire  or  accident,  the  whole  loss  is  attributable  to  the  capture. 


o.  XX.  Brown  v.  St.  Nicholas  Ins.  Co.  5.55 

The  vessel  was  never  delivered  from  that  peril  until  she  was 
virtually  destroyed  and  unable  to  perform  the  voyage.  In 
such  a  case  the  insurers  are  liable,  though  the  loss  is  followed 
by  the  operation  of  a  peril  excepted  from  the  policy.  Phil,  on 
Ins.,  §  1161. 

It  is  not  chiiraed  that  stranding  is  ipso  facto  a  total  loss. 
It  may  and  often  does  prove  the  destruction  of  the  voyage,  by 
the  ship  afterward  becoming  a  wreck  before  she  shall  be  put 
afloat.  Wood  v.  Lin.  and  Ken.  Ins.  Co.,  6  Mass.  -1:79  ;  Manning  v. 
Newnham,  3  Douglas,  130;  2  Phill.  on  Ins.,  §  1526.  Whether 
it  is  to  be  regarded  as  a  total  loss  or  not,  depends  on  all  the 
circumstances  of  the  case,  as  they  ultimately  turn  out,  which 
may  relate  back  to  the  time  of  stranding  and  characterize  it. 
It  is  closely  analogous  to  submersion,  and  is  'prima  facie  evi- 
dence of  total  loss.  Sewall  v.  U.  S.  Ins.  Co.,  11  Pick.  90,  94. 
If  the  ship  remains  stranded  and  is  subsequently  lost,  and  it 
is  claimed  by  the  insurers  that  such  loss  is  occasioned  by  a  peril 
excepted  from  the  policy,  it  must  appear  that  it  is  owing  to  the 
direct  effect  of  the  excepted  peril,  1  Phill.  on  Ins.  §§  1129, 
1131.  The  burden  of  proof  is  thus  cast  on  the  defendant. 
Per  Bayley,  J.,  in  Levi  v.  Allnutt,  15  East,  269. 

It  is  now  proper  to  consider  the  authorities  cited  on  behalf 
of  the  defendant. 

The  case  of  Iladkinson  v.  Robinson  ( 3  B.  &  P.,  388,  a.  d. 
1803,)  was  an  insurance  against  capture  on  a  cargo  from  an  Eng- 
lish port  to  Naples,  with  leave  to  join  a  convoy.  In  the  course 
of  the  vo^'age,  information  was  received  by  the  master  that  the 
port  of  Naples  was  closed  against  English  ships.  The  ship  ac- 
cordingly proceeded  to  another  port  where  the  cargo  was  sold 
for  a  small  sum,  whereupon  the  assured  abandoned  as  for  a 
total  loss.  The  court  held  that  the  fear  or  prospect  of  capture 
in  a  hostile  port  was  not  equivalent  to  capture  itself,  or  in  its 
own  language,  that  the  peril  must  act  directly  and  not  collater- 
ally upon  the  thing  insured.  If  the  principle  of  this  case  be 
sound,  of  which  there  is  great  doubt  (3  Kent's  Com.  293, 
294),  it  has  no  application  to  the  case  at  bar,  where  a  sea  peril 
did  act  directly  upon  the  boat,  and  occasioned  its  stranding. 
Forster  v.  Christie  (11  East,  205)  is  to  the  same  general  effect. 
Lord  Ellenborough  remarking  that  the  risks  insured  against 
must  be  the  effective  cause  of  the  loss.     Speyer  v.  New   York 


55o  Ln.sukance:    Fire,  Life,  Marine.  o.  xx 

Insurance  CoTrvpany^  (3  J.  E..  88,)  simply  holds,  that  if  the  event 
happens  on  which  the  insurers  are  warranted  free  from  liabiUty, 
it  is  equivalent  to  an  actual  termination  of  the  risk  by  the  land- 
ing of  the  goods.     This,  of  course,  is  not  disputed. 

Livie  V.  Jan  son  (12  East,  047)  is  much  relied  on  by  the  de- 
fendants. In  that  case,  an  English  ship  endeavored  to  elude, 
by  night,  an  embargo,  in  passing  out  of  the  port  of  New  York  ; 
a  body  of  ice,  propelled  by  the  tide  and  wind,  drove  her  upon 
Governor's  Island,  where  she  was  stranded.  In  the  morning 
she  was  taken  possession  of  by  the  custom-house  officers,  and, 
finally,  condemned  for  a  breach  of  the  embargo.  In  an  action 
on  a  policy  of  insurance,  the  court  held  that  the  loss  was  not 
occasioned  by  the  stranding,  but  by  the  seizure,  which  was 
deemed  to  be  the  proximate  cause  of  the  loss.  Two  observa- 
tions are  to  be  made  upon  this  case  :  One  is,  that  the  ship  was 
engaged  in  the  violation  of  law,  and  on  account  of  that  the 
seizure  was  made.  The  loss  was,  virtuall}^  occasioned  by  the 
act  of  breaking  the  embargo.  The  other  observation  is,  that 
the  peril  which  was  held  to  occasion  the  loss  acted  directly 
upon  the  property  insured.  In  that  aspect  of  the  case,  it  falls 
within  the  rule  laid  down  by  Lord  Alvanley,  in  the  case  of 
Hadkinson  v.  Robinson,  already  referred  to,  that  the  peril 
must  act  directly,  and  not  collaterally,  upon  the  thing  insured. 
This  was  not  the  case  in  the  facts  now  under  discussion;  as  to 
the  action  of  the  ice.  It  acted  only  indirectly  in  preventing 
the  tugs  from  going  to  the  rescue  of  the  boat.  If  it  had  reached 
the  canal,  and  the  storm  had  caused  its  banks  to  Durst,  and  the 
boat  had  been  swept  out  into  the  open  fields,  and  ice  had  been 
formed  between  it  and  the  canal — thus  preventing  the  use  of 
appliances  for  returning  it  to  the  canal — would  the  ice  have 
acted  directly  in  causing  the  detention  ?  If  so,  and  there  had 
been  no  ice,  would  the  earth  that  was  washed  out  of  the  canal 
bank,  and  whose  absence  prevented  the  filling  of  the  level,  be 
a  cause  of  detention  ?  Or,  if  laborers  could  not  be  got  to 
shovel  the  earth  back,  would  the  absence  of  them  be  such  a 
cause?  All  these  are  obstacles  or  hindrances  to  the  prosecu- 
tion of  the  voyage,  but  none  of  them  act  directly,  as  causes, 
within  the  rule,  either  in  Hadkinson  v.  Robinson,  or  Livie  v. 
Janson. 

It  should  be  added,  that  there  is  great  reason  to  doubt  the 


0.  XX.  Brown  v.  St.  Nicholas  Ins.  Co.  557 

soundness  of  each  of  these  cases.  The  former  of  them  has 
already  been  remarked  upon.  Livie  v.  Janson  has  been  severely 
criticised  by  text  writers,  and  doubted  in  decisions.  Mr. 
Phillips  says  it  is  surely  wrong,  as  well  as  the  7iisi  j),-^us  case 
of  Green  v.  Elmslie,  1  Peake's  N".  P.  Cases,  p.  212.  He  adds, 
that  these  decisions  need  support  themselves  rather  than  suffice 
for  the  support  of  others. 

The  only  other  case  necessary  to  be  noticed  is  Patrick  v. 
Com.  Ins.  Co.,  11  J.  R.  14.  In  this  case  a  cargo  was  insured 
from  New  York  to  Cadiz,  and  there  was  a  clause  in  the  policy 
that  the  insurers  took  no  risks  in  port  but  sea  risk.  The  ship 
was  forced  from  her  moorings  in  a  violent  gale,  and  driven  on 
shore,  where  she  lay  above  high-water  mark.  After  the  gale 
abated,  she  was  forcibly  taken  possession  of  by  French  troops, 
then  holding  the  port,  and  burnt  with  the  cargo.  The  cargo 
was  not  injured  by  the  stranding.  The  court  held  that  the 
cargo  was  not  lost  through  the  stranding,  but  through  the 
forcible  act  of  the  French. 

The  decision  is  rested  solely  on  these  doubtful  cases  of  Livie 
V.  Janson  and  Green  v.  Ehnslie,  already  considered,  and  can, 
of  course,  be  of  no  higher  authority.  It  is  also  quite  difficult 
to  reconcile  with  the  decision  immediately  preceding  it  in  the 
same  volume,  where  the  court  held  that,  on  the  same  state  of 
facts,  the  ship  was  lost  by  means  of  the  stranding.  It  seems 
impossible  to  deny  that  the  cargo,  under  the  circumstances, 
was  identified  with  the  ship,  and  that,  within  the  principle  in 
Hahn  V.  Corhett,  supra,  the  goods  were  as  completely  lost  at 
the  moment  of  stranding  as  if  they  had  been  cast  on  an  inac- 
cessible rock. 

The  judgment  of  the  court  below  must  be  affirmed. 

All  concur. 

Judgment  affirmed. 


658  Insurance  :    Fire,  Life,  Marine.  o.  xx 

English  Court  of  Common  Pleas,  1852. 

MAGNUS   V.    BUTTEMER. 

(11  C.  B.  875.) 
Whether  loss  by  perils  of  the  sea,  or  wear  and  tear. 

Action  of  assumpsit  on  a  policy  of  assurance  on  the  ship 
Elizabeth,  for  twelve  calendar  months,  in  port  or  at  sea,  in  all 
services,  in  the  coast  and  coasting  trade  of  the  United  Kingdom. 

The  Elizabeth  sailed  from  Rochester  to  Sunderland.  On 
her  arrival  at  Sunderland,  the  vessel  went  up  the  river  abreast 
of  Laing's  ship-yard.  She  had  to  wait  four  or  five  days  before 
she  could  go  in  to  discharge.  She  was  moored  head  and  stern, 
and  floated  when  the  tide  was  in,  and  was  aground,  but  not  dry, 
at  low  water.  She  took  three  days  to  discharge.  The  beach 
was  hard,  shingly,  and  steep.  When  the  vessel  took  ground, 
she  listed  towards  the  beach  about  two  planks.  When  the  first 
tide  was  ebbing,  a  creaking  noise  was  heard  as  she  took  the 
ground,  and  it  occurred  when  she  floated  again.  This  hap- 
pened every  tide,  and  sounded  as  if  something  was  breaking. 
The  cabin  door,  which  would  open  and  shut  freely  when  the 
vessel  was  afloat,  would  not  do  so  when  she  was  aground. 
After  first  lying  on  the  beach  the  vessel  made  more  water  than 
usual.  The  mate  saw  that  she  was  "  hogged,"  after  having 
taken  the  ground.  He  observed  that  some  of  the  trenails  had 
started,  and  that  some  of  the  planks  had  left  the  trenails. 

The  question  for  the  opinion  of  the  court  was,  whether, 
under  these  circumstances,  there  was  a  loss  by  perils  of  the 
seas. 

Jervis,  C.  J. — I  am  of  opinion  that  the  loss  in  this  case  was 
not  a  loss  by  perils  of  the  sea,  but  a  damage  falling  within  the 
description  of  ordinary  wear  and  tear.  No  doubt,  the  question 
is  one  of  importance  ;  but  I  think  it  has  been  very  unneces- 
sarily- brought  before  the  court ;  for  the  matter  seems  to  have 
been  perfectly  understood  and  settled  by  all  the  text  writers 
upon  this  branch  of  the  law.  To  make  the  underwriters  liable, 
the  injury  must  be  the  result  of  something  fortuitous  or  acci- 
dental occurring  in  the  course  of  the  voyage.  Here  the  vessel, 
upon  her  arrival  at  Sunderland,  goes  up  the  river,  and,  in  con- 


o.  XX.  Magnus  v.  Bdttemeb.  659 

sequence  of  the  rising  and  falling  of  the  tide,  rests  upon  the 
river's  bed,  and  receives  damages.  There  was  nothing  unusual, 
no  peril,  no  accident.  To  hold  that  the  assured  were  covered, 
in  such  a  case,  would  be  virtually  making  the  policy  a  warrAuty 
against  the  wear  and  tear  and  ordinary  repairs  of  the  vessel, 
I  think  the  defendant  is  entitled  to  judgment. 

Maule,  J. — I  am  of  the  same  opinion,  and  I  concur  with 
the  lord  chief  justice  in  thinking  that  this  is  a  very  clear  case. 
Stevens,  and  the  other  text  writers  referred  to,  express  no  sort 
of  doubt,  but  are  evidently  well  acquainted  with  the  distinction 
between  wear  and  tear,  for  which  the  underwriters  are  not 
liable,  and  accidents,  the  occurrence  of  something  out  of  the 
ordinary  course  of  the  voyage,  for  which  they  ar^  liable.  This 
distinction  has  been  well  understood  for  many  years.  To  hold 
the  underwriters  liable  in  such  a  case  as  this  would  be  tanta- 
mount to  holding  that  the  ordinary  repairs  of  a  vessel  are  to 
be  comprehended  within  the  perils  insured  against.  The  case 
of  Fletcher  v.  Tnglis  was  sufficiently  distinguished  in  the 
course  of  the  argument ;  the  statement  of  damage  there  is 
this :  "  Between  9  and  10  at  night,  the  tide  having  then 
left  the  vessel,  a  cracking  noise  was  heard  in  the  ship, 
proceeding,  as  the  witness  believed,  from  something  break- 
ing. Some  time  after  this,  on  the  return  of  the  tide,  there 
was  a  Gonsiderahle  swell  m  the  harbor^  and  the  ship  struck  the 
ground  hard  several  times ;  in  the  morning  eighteen  of  her 
knees  were  found  to  be  broken."  There  were  in  that  case 
some  circumstances  which  also  occur  here ;  but  there  was 
another  circumstance  there  which  is  wanting  here  to  make  the 
cases  parallel.  There  was  casus  J  rrtuitiis,  the  swell  that  set 
in,  after  which  the  ship's  knees  were  found  to  be  broken. 
That,  I  apprehend,  was  the  ground  of  the  decision  in  that  case  ; 
and  that  is  quite  consistent  with  the  argument  of  Mr.  Scarlett, 
who  was  not  likely  to  lay  down  a  general  doctrine  which  did 
not  meet  the  assent  of  the  court,  so  familiar  as  they  were  at 
that  time  with  insurance  law.  The  case  evidently  proceeded 
upon  the  extraordinary  and  accidental  circumstance  of  the 
great  swell  setting  in  the  harbor.  Suppose,  instead  of  the 
swell,  the  case  had  stated,  or  the  evidence  shown,  that  a 
violent   storm   had    arisen,  and   that   the   vessel    was   dashed 


560  Insurance  :    Fire,  Life,  Marine.  c.  xx. 

against  a  rock  and  injured,  nobody  could  have  doubted  that 
that  was  a  loss  by  p(3rils  of  the  sea.  That  only  differs  in 
degree  from  the  actual  case  of  Fletcher  v.  Inglis  /  but  it  differs 
very  materially  from  the  present  case,  which  shows  a  mere 
subsiding  of  the  ship  upon  the  shore  or  beach  on  the  receding 
of  the  tide  in  the  usual  and  expected  course.  According  to 
sound  law  and  common  sense,  the  assured  was  entitled  to 
recover  in  that  case,  whereas  here  nothing  has  happened  which 
the  assured  could  have  wished  or  anticipated  to  ha}>pen  other- 
wise than  it  did  happen.  They  intended  the  ship  to  take  the 
ground  as  she  did.  There  was  no  accident.  We  are  asked, 
therefore,  to  assume  a  loss  by  perils  of  the  sea  when  the  facts 
disclosed  to  us  absolutely  negative  the  existence  of  sea  peril. 
No  instance  is  to  be  found  of  underwriters  being  liable  Avhere 
the  voyage  has  been  conducted  to  its  termination  without  any- 
thing happening  but  what  was  expected  and  intended,  and 
where  the  sole  cause  of  the  damage  was  the  insufficiency  of  the 
ship  to  bear  the  ordinary  stress  of  the  voyage  to  which  she  is 
exposed.  Authority  and  common  sense  concur  in  showing 
that  this  is  not  a  liability  which  ought  to  be  cast  upon  the 

underwriters. 

Judgment  for  the  defendant. 

TTnited  States  Supreme  Court,  1873. 
GREAT  WESTERN   INS.   CO.   v.   FOGARTT. 

(19  Wall.  640.) 
Total  loss  ;  warranted  free  of  particular  average. 

Error  to  the  Circuit  Court  for  the  Southern  District  of 
New  York. 

Fogarty  sued  the  Great  Western  Insurance  Company  on 
a  policy  of  marine  insurance,  and  recovered  a  judgment  for 
$2,611.95  and  costs.  The  policy  was  an  open  one,  and  the 
indorsement  procured  by  the  plaintiff  on  it  was  of  insurance  for 
$2,250  on  machinery  on  board  the  bark  Ella  Adele,  at  and  from 
New  York  to  Havana,  free  from  particular  average.  The 
memorandum  clause  of  the  policy  provided  that  machines  and 
machinery  of  every  description  were  warranted  by  the  assured 
free  from  average  unless  general.     The  machinery  insured  con- 


o.  XX.  GsBAT  Western  Ins.  Co.  v.  Fogartt.  561 

sisted  of  the  various  parts  necessary  for  a  complete  sugar-pack- 
ing machine,  including,  as  part  of  it,  three  sets  of  truck-irons, 
and  also  other  extra  truck-irons.  It  was  described  in  the  bill  of 
lading  and  invoice  as  eight  pieces  and  eight  boxes,  composing 
one  sugar-packer  and  three  trucks. 

The  vessel  on  which  these  articles  were  being  transported 
from  New  York  to  Havana,  just  before  reaching  the  latter 
city,  was  driven  on  rocks  in  a  violent  gale,  was  filled  with 
water,  and  finally  became  a  total  wreck,  and  was  abandoned 
to  the  underwriters.  Their  agent  at  Havana  took  possession, 
and  was  engaged  about  a  month  in  raising  the  cargo.  A  large 
number  of  the  pieces  composing  the  plaintiff's  machinery  was 
recovered  and  tendered  to  him  at  Havana,  which  he  refused  to 
receive,  on  the  ground  that  the  insurance  company  was  liable 
to  him  as  for  a  total  loss.  They  denied  that  under  the  circum- 
stances of  the  case  there  was  a  total  loss  within  the  meaninsr 
of  the  policy  ;  and  the  soundness  of  the  instruction  to  the  jury 
on  that  point,  given  and  refused  by  the  circuit  court  on  the 
trial,  was  the  only  question  now  before  this  court. 

There  was  very  little  conflict  of  testimony  as  to  what  was 
recovered,  and  what  was  itc  condition  when  tendered  to  plain- 
tiff. It  was  all  of  iron.  About  half  of  it  in  weight  was  saved, 
and  the  remainder  left  at  the  bottom  of  the  sea.  That  which 
was  saved  was  entirely  useless  as  machinery,  and  was  of  no 
value  except  as  old  iron,  for  which  purpose  it  would  sell  for 
about  $50.  The  machinery  in  working  order  was  worth 
$2,250.  That  which  was  saved  was  much  broken  and  rusted, 
so  that  it  would  cost  more  to  repair  it,  pohsh  it,  and  put  it  in 
order  for  use  than  to  buy  a  new  machine. 

Upon  the  testimony  offered  by  the  plaintiff  the  counsel  for 
the  defendant  moved  the  court  to  instruct  the  jury  that  the 
action  could  not  be  sustained,  because  it  showed  that  there  was 
not  a  total  loss.  The  court  declined  to  do  this,  and  the  request 
was  renewed  at  the  conclusion  of  the  defendant's  evidence,  and 
again  declined.  Several  prayers  for  instruction  were  then  pre- 
sented by  the  defendant,  based  upon  the  leading  proposition, 
that  if  any  of  the  pieces  of  the  machinery  insured  was  recov- 
ered and  tendered  in  specie  to  the  assured,  there  was  no  total 
loss.  These  were  refused  and  exceptions  taken  to  all  these 
refusals,  on  which  error  is  assigned  here.     An  exception  was 


562  Insurance  :    Fire,  Life,  Marine.  o.  xx. 

also  taken  as  to  the  charge  of  the  court  laying  down  the  law 
by  which  the  jury  were  to  decide  the  question  of  total  loss  sub- 
mitted to  them.     That  cliarge  was  in  the  following  words  : 

"  The  meaning  of  the  term  '  free  from  particular  average/ 
used  in  the  policy,  was  that  the  defendants  should  be  liable 
only  for  a  total  loss  of  the  subject  insured  ;  that  the  subject 
insured  was  not  machines  but  machinery,  by  which  is  generally 
understood  the  several  parts  or  portions  of  machines,  adapted 
and  fitted  to  be  put  together  so  as  to  constitute  a  machine  (in 
this  case  a  sugar-packing  machine),  and,  applying  the  rule  of 
law  as  to  what  constitutes  a  total  loss  to  this  particular  subject 
insured,  the  jury  will  find  whether  any  piece  or  portion  of  the 
machinery  insured  arrived  at  its  destination  in  a  perfect  condi- 
tion, so  that  it  could  have  been  used  with  its  corresponding  or 
connecting  pieces  had  they  also  arrived  in  good  condition ;  in  that 
case  the  plaintiffs  could  not  recover,  as  the  loss  would  not  be 
total ;  but  that  if  every  piece  of  the  machinery  was  so  damaged 
by  the  perils  insured  against  as  to  be  entirely  unfit  for  use  on 
being  supplied  with  its  corresponding  or  connecting  pieces,  then 
there  was  a  total  loss  of  the  subject  insured  as  machinery, 
although  the  material  itself  might  still  exist ;  and  if  they  so 
found,  they  would  find  a  verdict  for  the  plaintiff  for  the  sum 
named  in  the  policy,  with  interest  from  the  tenth  day  of  Septem- 
ber, 1868." 

Yerdict  and  judgment  having  gone  for  the  plaintiff,  the 
insurance  company  brought  the  case  here. 

Mr.  Justice  Miller  delivered  the  opinion  of  the  court. 

The  question  presented  in  this  case  for  consideration  has 
been  often  in  the  courts,  and  the  discriminations  between  what 
is  total  loss  and  what  is  not  are  frequently  very  nice  and 
delicate.  The  authorities  are  by  no  means  uniform  or  consist- 
ent with  each  other,  when,  as  in  the  present  case,  the  line  of 
distinction  is  very  narrow.  Several  cases  bearing  upon  the 
one  before  us  have  been  decided  in  this  court,  and  perhaps  a 
short  review  of  them  may  aid  us  here  better  than  a  more  ex- 
tended examination  of  the  numerous  other  authorities  on  the 
subject. 

In  the  case  of  Biays  v.  Chesapeake  Ins.  Co.  (7  Granch,  415), 
the  plaintiff    was  insured  upon  hides,  the  whole  number  of 


0.  XX.  Great  Western  Ins.  Co.  v.  Fogartt.  563 

which  was  14,565.  Of  these,  789  were  totally  lost  by  the  sink- 
ing of  a  lighter,  and  2,491  of  those  sunk  were  fished  up  in  a 
damaged  condition  and  sold.  The  hides  were  memorandum 
articles,  and  this  court  held  that  inasmuch  as  less  than  800 
hides  insured  as  part  of  a  much  larger  number  of  the  same 
kind  was  lost,  it  could  not  be  a  total  loss,  and  overruled  the 
argument  that  it  was  a  total  loss  as  to  the  789  hides. 

In  the  case  of  Marcardier  v.  Chesapeake  Ins.  Co.  (8 
Id.  47),  it  is  said  that  "  it  seems  to  be  the  settled  doctrine 
that  nothing  short  of  a  total  extinction  either  physical  or  in 
value  of  memorandum  articles  at  an  intermediate  port  would 
entitle  the  insured  to  terra  the  case  a  total  loss,  where  the  voy* 
age  is  capable  of  being  performed.  And  perhaps  even  as  to  an 
extinction  in  value,  where  the  commodity  specijiGally  remains, 
it  may  yet  be  deemed  not  quite  settled  whether,  under  like 
circumstances,  it  would  authorize  an  abandonment  for  a  total 
loss." 

In  the  case  of  Morean  v.  The  United  States  Ins.  Co.  (1 
Wheaton,  219),  more  than  half  of  a  cargo  of  corn  was  thrown 
overboard  and  lost.  The  remainder  was  saved  in  a  damaged 
condition,  and  sold  at  about  one-fourth  the  market  value  of 
sound  corn.  This  was  held  not  to  be  a  total  loss,  because  part 
of  the  corn  was  saved,  and  though  damaged  was  of  some 
value.     It  was  therefore,  only  a  partial  loss. 

The  next  case  is  that  of  Hugg  v.  The  Augusta  Insurance  Co., 
1  Howard,  595.  The  question  there  arose  on  an  insurance  of 
jerked  beef  of  four  hundred  tons,  part  of  which  was  thrown  into 
the  sea  and  part  of  the  remainder  so  seriously  damaged  that  the 
authorities  of  the  city  of  Nassau  refused  to  allow  more  than  150 
of  it  to  be  landed.  This  was  wet  and  heated,  and  not  in  a  con- 
dition for  reshipment.  In  answer  to  a  question  on  this  subject, 
certified  to  this  court  by  the  judges  of  the  circuit  court,  it  was 
replied,  "  that  if  the  jury  found  that  the  jerked  beef  was  a  per- 
ishable article  within  the  meaning  of  the  policy,  the  defendant 
is  not  liable  as  for  a  total  loss  of  the  freight,  unless  it  appears 
that  there  was  a  destruction  in  specie  of  the  entire  cargo  so 
that  it  had  lost  its  original  character  at  Nassau,  or  that  a  total 
destruction  would  have  been  inevitable  from  the  damage  re- 
ceived if  it  had  been  reshipped  before  it  could  have  arrived  at 
Matanzas,  the  port  of   destination."     And  though   there  are 


564  Insurance:    Fire,  Lifk,   Marine.  o.  xx. 

some  very  strong  expressions  of  the  judge  who  dehvered  the 
opinion  as  to  the  necessity  of  the  total  destruction  of  the  thing 
insured  to  estabhsh  a  total  loss  in  memorandum  articles,  no 
doubt  the  language  here  certified  is  the  true  expression  of  the 
court's  opinion.  And  it  will  be  observed  that  in  this  case,  as 
in  the  case  of  Marcardier  v.  Chesapeake  Insurance  Co.^  the 
destruction  spoken  of  is  destruction  as  to  species,  and  not  mere 
physical  extinction.  Indeed,  philosophically  speaking,  there  can 
be  no  such  thing  as  absolute  extinction.  That  of  which  the 
thing  insured  was  composed  must  remain  in  its  parts,  though 
destroyed  as  to  its  specific  identity.  In  the  case  of  the  jerked 
beef,  for  instance,  it  might  remain  as  a  viscid  mass  of  putrid 
flesh,  but  it  would  no  longer  be  either  beef  or  jerked  beef. 
And  when  the  case  went  back  for  trial  in  the  circuit,  the 
charge  of  Taney,  C.  J.,  to  the  jury  places  this  point  in  a  very 
clear  light.  Taney's  Decisions,  168.  He  says  there  was  not  a 
total  loss  at  Nassau,  because  a  part  of  the  jerked  beef  remained 
in  specie,  and  had  not  been  destroyed  by  the  disaster.  And 
if  there  was  reasonable  ground  for  believing  that  a  por- 
tion of  this  beef  could,  by  repairing  the  vessel,  have  been 
transported  to  Matanzas,  although  it  might  arrive  there  in  a 
damaged  condition,  but  yet  retaining  the  character  of  jerked 
leef,  there  was  no  total  loss.  The  jury  found  there  was  a 
total  loss.  The  case  of  Judah  v.  Randal  (2  Caine's  Cases,  324), 
where  a  carriage  was  insured,  and  all  was  lost  but  the  wheels, 
is  another  illustration  of  the  principle.  A  part  of  the  carriage 
— namely,  the  wheels — a  very  important  part,  was  saved  ;  but 
the  court  held  that  the  thing  insured — to  wit,  the  carriage — 
was  lost;  that  it  was  a  total  loss.  Its  specific  character  as  a 
carriage  was  gone. 

In  the  case  of  Wallerstein  v.  The  Coluinbian  Insurance  Co. 
(44  N.  Y.  204),  the  whole  doctrine  is  ably  reviewed  with  a  very 
full  reference  to  previous  decisions ;  and  it  is  there  shown  that 
there  is  far  from  unanimity  in  the  language  in  which  the  rule 
is  expressed,  and  the  extreme  doctrine  of  an  absolute  extinction 
or  destruction  of  the  thing  insured  is  not  the  true  doctrine,  or, 
at  least,  is  not  applicable  in  all  cases  as  a  criterion  of  total  loss. 

The  circuit  court  was  right  in  holding  that  what  was  in- 
sured was  machinery — pieces  or  parts  of  a  machine — pieces 
made  and  shaped  to  unite  at  points  with  other  pieces  so  as  to 


0.  IX.  Gkeat  Western  Ins.  Co.  v.  Fogabtt.  565 

make  a  sugar-packing  machine.  If  parts  of  them  were  abso- 
lutely lost,  and  every  piece  recovered  had  lost  its  adaptability 
to  be  used  as  part  of  the  machine — had  lost  it  so  entirely  that 
it  would  cost  as  much  to  buy  a  new  piece  just  like  it  as  to  re- 
pair or  adapt  that  one  to  the  purpose — then  there  was  a  total 
loss  of  the  machinery.  If  no  piece  recovered  was  of  any  use, 
or  could  be  applied  to  any  use  connected  with  the  machine  of 
which  it  was  a  part,  without  more  expense  on  it  than  its  orig- 
inal cost,  then  there  was  no  part  of  the  machinery  saved,  how- 
ever much  of  rusty  iron  may  have  been  taken  from  the  wreck. 
The  court  went  quite  as  far  in  behalf  of  the  defendant  as  the 
law  justified,  when  it  told  the  jury  that  the  plaintiff  could  not 
recover  if  any  piece  or  portion  of  the  machinery  insured  arrived 
at  its  destination  in  a  condition  so  perfect  that  it  could  have 
been  used  with  its  corresponding  or  connecting  pieces,  had  they 
also  arrived  in  good  condition. 

We  are  of  the  opinion  that  the  charge  of  the  court  put  the 
case  very  fairly  to  the  jury,  as  we  understand  the  law,  and  the 

judgment  is,  therefore, 

Affirmea 


\  "H 


APPENDIX. 
STATUTES    AND    FORMa 


APPENDIX. 
STATUTES  AND  FOBMS. 


CHAPTER  L 

•VATUTBS  OOYBRNHTO  THB  OONTBAOT.* 

I. 

CivU  Codes. 

The  following  States  have  adopted  civil  codes  which  treat  of  th* 

subject  of  insurance  law  with  some  detail. 

California,  Deering's  Codes  and  Stat-  Idaho,  Rev.  Stat.  1887. 

utes,  1885.  North  Dakota.     See  Dakota. 

Dakota,  Compiled  Laws,  1887.  Oklahoma,  Com.  Stat.  1891. 

Georgia^ode,  1883.  South  Dakota.     See  Dakota. 

n. 

Agmey. 

The  following  States  have  adopted  laws  providing  that  the  soliciting 

agent  shall  be  deemed  the  agent  of  the  insurer. 

The  Connecticut  statute  is  given  as  a  specimen  : 

"  Wlioever  solicits,  procures,  or  receives  in,  or  transmits  from,  the  State 
any  application  other  than  his  own  for  membership  or  insurance  in  any 
corporation  or  association  embraced  by  section  2892,  shall  be  deemed  and 
held  to  be  an  agent  of  such  corporation  or  association  within  the  meaning 
of  this  chapter." 

Arizona,  R.  S.  1887,  §  360.  Iowa,  McClain's  Code,  1888,  §  1783 

Connecticut,    Gen,    Stat.    1888,    %\  (L.  1880,  ch.  211,  §  1). 

2898,  2923.  Kentucky,  Pub.  Acts,   1885-86,  ch. 

Delaware,  Laws,  1875,  ch.  179.  697,  §  1  ;   Pub.  Acts,  1883-4,  ch. 

Georgia,^  Laws,  1887,  p.  121,  §  9.  871,  §  7  (Foreign  Co.'s). 

IlUnois,  R.  8.  1891  (Cothran),  p.  840,  Maine,  R.  S.  1883,  p.  445,  §  19. 

§  58. 

*  In  addition  to  ttae  tables  of  statutes  relat-    for  convenience,  appended  lists  of  refarenoM 
Jng  to  the  contract  of  insorance.  I  bavfl  also,    to  retaliatory  and  anti-compact  lawi. 


570 


Appendix. 


a  I. 


Massachusetts,  Acts,  1887,  ch.  214,  Pennsylvania,    Brightly's    Purdon's 

§  87.  Digest,     1883,     vol.     1,     p.    919, 

Mississippi,  Code,  1880,  §  1085.  §  82. 

Missouri,  R.  S.  1889,  §  5915.  Rhode  Island,  Pub.  Laws,  Jan.  1884, 
Nebraska,  Comp.  Stat.  1891,  ch.  16,         p.  55,  §  7.     Pub.  Laws,  Jan.  1885, 

§  8.  p.  63,  §  1. 

New  Hampshire,  Laws,  1889,  ch.  94,  South  Carolina,  Laws,  1883,  p.  460, 

§  2.  §  6. 

New  Mexico,  Comp.   Laws,  1884,  §  Tennessee,  Acts,  1887,  ch.  187,  §  6. 

1479.  Texas,  Sayle's  Civil  Stat.  1888,  vol. 
North  Dakota,  Laws,   1891,  p.  203,         2,  §  2943a. 

§  28.  Vermont,  Rev.  Laws,  1880,  §  3620. 

Ohio,  R.  8.  1890  (Smith  &  Ben.),  Virginia,  Acts,  1887,  ch.  271,  §  5. 

§  3644.  Wisconsin,  Sanborn  &  B.'s  Anuot. 
Oklahoma,  Stat.  1890,  p.  637,  §  23.        Stat.  1889,  vol.  1,  §  1977. 


m. 

Annexation  of  Application  to  Policy. 

The  following  States  have  adopted  laws  requiring  the  annexation  of 

fcpplicaticns  to  policies. 

The  Ohio  statute  is  given  as  a  specimen  : 

"Every  company  doing  business  in  this  State  shall  return  with  and  as 
part  of  any  policy  issued  by  it,  to  any  person  taking  such  policy,  a  full  and 
complete  copy  of  each  application  or  other  document  held  by  it  which  is 
intended  in  any  manner  to  affect  the  force  or  validity  of  such  policy,  an'I 
any  company  which  neglects  so  to  do  shall,  so  long  as  it  is  in  default  for 
such  copy,  be  estopped  from  denying  the  truth  of  any  such  application  or 
other  document;  and  in  case  such  company  neglect,  for  thirty  days  after 
demand  made  therefor,  to  furnish  such  copies,  it  shall  be  forever  barred 
from  setting  up,  as  a  defense  to  any  suit  on  such  policy,  any  incorrectness 
or  want  of  truth  of  such  application  or  other  document." 


CaUf  omia.  See  Deering's  Civil  Code, 

§  2605. 
Iowa,  McClain's  Stat.  1888,  §  1733. 
Kansas,  Gen.  Stat.   1889,  vol.   1,  § 

3437. 
Massachusetts,  Acts,  1890,  ch.  421, 

i  SI. 


Ohio,  R.  S.  1890,  vol.  1,  §  3623. 
Oklahoma,  Stat.  1890,  §  3155. 
Pennsylvania,     Brightly's   Purdon's 

Digest,  vol.  1,  p.  924,  §  108. 
Wisconsin,  Sanborn  &  B.'s  Annot. 

Stat.  1889,  vol.  1,  ^  1945a. 


IV. 

Provisiona  of  Application  or  By-Laws  to  te  set  forth  in  Policy. 
The  following  States  have  adopted  laws  providing  that  conditions  are 
not  valid  or  provisions  of  application  or  by-laws  are  not  binding  unless  set 
forth  in  the  policy. 


a  I.  Appendix.  671 

The  Pennsylvania  statute  is  given  as  a  specimen  : 

"All  life  and  fire  insurance  policies  upon  the  lives  or  property  of  per- 
sons within  this  commonwealth,  whether  issued  by  companies  organized 
under  the  laws  of  this  State,  or  by  foreign  corporations  doing  business 
therein,  which  contain  any  reference  to  the  application  of  the  insured,  or 
the  constitution,  by-laws  or  other  rules  of  the  company,  either  as  forming 
part  of  the  policy  or  contract  between  the  parties  thereto,  or  having  any 
bearing  on  said  contract,  shall  contain,  or  have  attached  to  said  policies, 
correct  copies  of  the  application,  as  signed  by  the  applicant,  and  the  by- 
laws referred  to;  and  unless  so  attached  and  accompanying  the  policy,  no 
such  application,  constitution  or  by-laws  shall  be  received  in  evidence,  in 
any  controversy  between  the  parties  to,  or  interested  in,  the  said  policy, 
nor  shall  such  application  or  by-laws  be  considered  a  part  of  the  policy  or 
contract  between  such  parties." 

Connecticut,  Gen.  Stat.  1888,  §  2836.  Massachusetts,  Acts,  1887,  oh.  214, 
Kansas,   Gen.   Stat.   1889,  vol.  1,  §        §  59. 

8437.  Pennsylvania,    Brightly's    Purdon's 
Maine,  R.  S.  1883,  ch.  49,  §  24.  Digest,  1883,  vol.  1,  p.  924,  §  108. 

V. 

Technical  Forfeitures. 

The  following  States  have  adopted  laws  providing  that  misrepresenta- 
tions and  other  breaches  of  policy  shall  not  avoid  unless  in  matters  mate- 
rial to  the  risk. 

The  Massachusetts  statute  is  given  as  a  specimen  : 

"No  oral  or  written  misrepresentation  made  in  the  negotiation  of  a 
contract  or  policy  of  insurance,  by  the  assured  or  in  his  behalf,  shall  be 
deemed  material  or  defeat  or  avoid  the  policy  or  prevent  its  attaching,  un- 
less such  misrepresentation  is  made  with  actual  intent  to  deceive,  or  unless 
the  matter  misrepresented  increased  the  risk  of  loss." 

Georgia.    See  Code,  1882,  §§  2803-  Missouri,  R.  S.  1889,  §  5849.  '      <'^^ 

2804.  New  Hampshire,   Laws,   1885,    ch.  ^^ 

Kentucky,  Gen.  Stat.  1887,  p.  308.  73. 

Maine,  R.  S.  1883,  p.  445,  §  30.  Ohio,  R.  S.  1890,  §  3625. 

Massachusetts,  Acts,   1887,  ch.  214,  Pennsylvania,   Laws,   1885,  p.   184, 
1 21.  §1. 

VL 

By-Laws  to  Govern  Claims  under  Polidm. 

Dakota  has  enacted  : 

"The  corporation  shall  in  and  by  its  by-laws  provide  for  the  manner 
in  which  such  insurance  shall  be  effected  and  the  terms  and  conditions 


572  Appendix.  0, 1 

thereof,  the  time  and  manner  in  which  losses  by  it  dustained  under  its 
policy  of  insurance  shall  be  determined,  proved,  adjusted  and  paid,  the 
time  and  manner  in  which  assessments  shall  be  made  upon  its  members  for 
their  respective  pro  rata  share  of  such  losses,  and  the  time,  manner  and  place 
in  which  and  the  person  to  whom  such  assessment  shall  be  paid;  it  shall 
also  in  and  by  its  by-laws  provide  such  other  regulations,  terms  and  condi- 
tions as  may  be  necessary  for  effectively  and  fully  carrying  out  its  scheme 
of  insurance;  and  the  said  by-laws  in  force  at  the  time  of  the  date  of  any 
policy  of  insurance  issued  by  the  corporation  shall  have  the  force  and 
effect  of  law  in  the  determination  of  all  questions  and  claims  arising  under 
such  policy  between  the  holder  thereof  and  the  said  corporation." 

Laws  of  Dakota,  1889,  ch.  09.  Art  10. 


vn. 

Corporate  Seal  not  Required  on  Policy. 

The  following  States  have  adopted  laws  providing  that  policies  of  in- 
surance cot  executed  over  the  corporate  seal  of  the  company  are  never- 
theless bJTiding. 

The  Pennsylvania  statute  is  given  as  a  specimen  : 

"Policies  of  insurance  made  or  entered  into  by  the  company  may  be 
made  either  with  or  without  the  seal  thereof,  and  they  shall  be  subscribed 
by  the  president  or  such  other  officer  as  may  be  designated  by  the  direct- 
ors for  that  purpose,  and  attested  by  the  secretary ;  and  when  so  subscribed 
and  attested,  shall  be  obligatory  on  the  company." 

Arizona,  R.  S.  1887,  §  253.  New  Mexico,  Comp.  Laws,  J  884,  § 

Colorado,  1  Mills  Stat.  1891,  §  2237.  1465. 

Idaho,  R.  S.  1887,  §  2742.  Ohio,  R.  S.  1890,  vol.  1,  §  3645. 

Kan8as,Gen.  Stat.  1889,  vol.  1,§  3347.  Pennsylvania,    Brightly's    Pardon's 

Maine,  R.  S.  1883,  ch.  49,  §  12.  Digest,   1883,    vol.    1,    p.    913,    % 

Montana,  R.  S.  1887,  p.  772,  §  575.  46. 

Nebraska,  Comp.  Stat.  1891,  ch.  43,  Washington,  Code,  1891,  §  2789. 

I  in.  Wyoming,  R.  S.  1887,  $  614. 


Limitation  of  Time  for  Suit. 

The  following  States  have  adopted  laws  forbidding  certain  limitations 
of  time  for  bringing  suit. 

The  Massachusetts  statute  is  given  as  a  specimen  : 

"No  such  company  shall  make  any  condition  or  stipulation  in  "its  in- 
surance contracts  concerning  tiie  court  or  jurisdiction  wherein  any  euit 
thereon  may  be  brought,  nor  shall  limit  the  time  within  which  such  suit 


aL 


Appendix. 


S78 


may  be  commenced  to  less  than  two  years  after  the  cause  of  action  accrues, 
and  any  such  condition  or  stipulation  sliall  be  void." 


Connecticut,  Gen.  Stat.  1888,  §  2912. 
Indiana,  R.  S.  1888,  vol.  2.  §  8770. 
Kentucky,  Public  Acts,  1873-4,  ch. 

186,  §  1  (Gen.  St.  1887,  p.  308). 
Maine,  R.  S.  1883,  ch.  49,  §  87. 


Massachusetts,  Acts,  1887,  ch.  214, 

Noith_Carolina,  Code,  1883,  vol.  2, 
'"§"3076.  "Laws,"  1883,  ch.  57,  §  16. 
Vermont,  Rev.  Laws,  1880,  §  8626. 


FiBE  Iksttranob. 
IX. 

Standard.  Policy. 

The  following  States  have  passed  statutes  for  the  adoption  of  a  stand- 
ard form  of  fire  policy : 


Massachusetts,   Acts,   1887,  ch.  214, 

§60. 
Michigan,  Pub.  Stat.  1882,  §§  4344- 

4353.     Amended    by   Pub.    Acts, 

1889,  ch.  39,  §  9. 
Minnesota,    Stat.    1891,    vol.    1,    §§ 

2973-2977.     Also  Gen.  Laws,  1889, 

ch.  217. 
New    Hampshire,   Laws,    1885,   ch. 


93,  §   3.     New  Jersey,   Laws  1893, 

ch.  231. 
New  York,  3  R.  S.  8th  ed.,  p.  1663. 

Laws,  1886,  ch.  488. 
North   Dakota,  Laws,  1890,  p.  253, 

ch.  74. 
Pennsylvania,  Laws,  1891,  p.  22,  §  1. 

(To  go  into  effect  May  1,  1892.) 
Wisconsin,  Laws,  1891, vol.  l,ch.  195, 


Valued  Policy. 

The  following  States  have  adopted  valued  policy  laws. 

The  Wisconsin  statute  is  given  as  a  specimen  : 

"Whenever  any  policy  of  insurance  shall  be  written  to  insure  real 
property,  and  the  property  insured  shall  be  wholly  destroyed,  without 
criminal  fault  on  the  part  of  the  insured  or  his  assigns,  the  amount  of  the 
insurance  written  in  such  policy  shall  be  taken  conclusively  to  be  the  true 
value  of  the  property  when  insured,  and  the  true  amount  of  loss  and 
measure  of  damages  when  destroyed." 

Arkansas,  Laws,  1889,  p.  57,  ch.  42.     Missouri,  R.  S.  1889,  vol.  2,  §  5897, 


Dakota.     See  Comp.  Laws,  1887,  § 

4151,  4243. 
Delaware,  Laws,  1889,  ch.  695. 
Iowa,  McClain-8    Stat.  1888,  §  1734 

(L.  1880,  ch.  211,  §  3). 


5898. 
Nebraska,  Comp.  Stat.  1891,  ch.  43, 

§  43  (Laws,  1889,  ch.  48,  §  1). 
New  Hampshire,  Laws,  1885,  ch.  98. 


674  Appendix.  a  L 

North  Dakota.     See  Dakota.  South  Dakota.     See  Dakota. 

Ohio,  R.   8.  1890,  §  3643.  Texas,  Sayles'  Civil  Stat.  1888,  vol. 

Oklahoma,  Stat.1890,  p.  631,  §§4  and        3,  §  2971. 

32.  Wisconsin,    Sanborn    &   B.   Annot. 
Pennsylvania,    Laws,    1887,    p.    186        Stat.  1889,  vol.  1,  §  1943. 

(Boiler  Ins.). 

XI. 

Notice  and  Proof  of  Loss. 

The  following  States  have  adopted  laws  forbidding  the  insertion  of 
conditions  requiring  notice  of  loss  within  less  than  five  days  and  the 
presentation  of  certificates  of  nearest  magistrate. 

The  Indiana  statute  is  given  as  a  specimen  : 

"No  such  insurance  company  sliall  insert  any  condition,  in  any  policy 
hereafter  issued,  requiring  the  insured  to  give  notice  forthwith,  or  within 
the  period  of  time  less  than  five  days,  of  the  loss  of  the  insured  property; 
nor  shall  any  condition  be  inserted  in  such  policy,  requiring  the  insured  to 
procure  the  certificate  of  the  nearest  Justice  of  the  Peace,  Mayor,  Judge, 
clergyman,  or  other  official,  or  person,  of  such  loss,  or  the  amount  of  such 
loss;  and  any  provision  or  condition  contrary  to  the  provisioud  of  this 
section,  or  any  condition  in  said  policy,  inserted  to  avoid  the  provisions 
of  this  section,  shall  be  void,  and  no  condition  or  agreement,  not  to  sue 
for  a  period  of  less  than  three  years,  shall  be  valid." 

Indiana,  R.  S.  1888,  vol.  2,  §  3770.  Maine,  R.  S.  1883,  p.  446,  §  21. 

Appraisal,  Vermont  R.  L.  §  3626.  Mortgagee,  Conn.  Gen.  Stat.  §  2839. 

xn. 

Cancellation  of  Policy. 

The  following  States  have  adopted  laws  providing  that  no  company 
shall  cancel  a  fire  insurance  policy  without  notice  first  given  and  unearned 
part  of  premium  returned. 

The  Connecticut  statute  is  given  as  a  specimen  : 

' '  No  insurance  company  or  association  shall  cancel  a  policy  issued 
against  loss  by  fire  on  property  in  this  State,  without  giving  the  party 
insured  at  least  five  days'  notice,  in  writing,  of  such  intention,  and  a 
return  of  the  ratable  proportion  of  the  premium  for  the  unexpired  term  of 
the  policy." 

Connecticut,  Gen.  Stat.  1888,  §  2852.  Michigan,  Public  Acts,  1887,  ch,  805, 

Dakota,  Compiled  Laws,  1887,  §3104.  §  17. 

Kansas,   Gen.    Stat.  1889,  vol.    1,    §  North  Dakota.     See  Dakota 

3435.  South  Dakota.     See  Dakota. 


o.  I.  Appendix.  676 

XIII. 

Privilege  of  Insured  to  Cancel  Policy. 

The  following  States  have  adopted  laws  providing  that  the  insured 
shall  have  the  privilege  of  insisting  on  the  cancellation  of  the  policy  at 
any  time. 

The  New  York  statute  is  given  as  a  specimen  : 

"Any  person,  company,  association  or  corporation  transacting  the 
business  of  fire,  or  fire  and  inland  navigation  insurance  in  this  State, 
shall  cancel  any  policy  of  insurance  hereafter  issued  or  renewed  at  any 
time,  by  request  of  the  party  insured  or  his  legal  representatives,  and  shall 
return  to  said  party  or  his  representatives  as  aforesaid  the  amount  of 
premium  paid,  less  the  customary  short-rate  premium  for  the  expired  time 
of  the  full  term  for  which  said  policy  has  been  issued  or  renewed,  any- 
thing in  the  policy  to  the  contrary  notwithstanding;  provided,  however, 
that,  where  the  laws  of  any  State  permit  companies  organized  under  its 
laws  to  cancel  policies  of  insurance  upon  different  terms  than  above  set 
forth,  companies  organized  under  the  laws  of  this  State  may  cancel  policies 
upon  risks  in  any  such  State  upon  the  same  terms  as  are  provided  for  com- 
panies organized  under  its  laws." 

California,     Deering's    Civil    Code,  Nebraska,  Comp.  Stat.  1891,  ch.  43, 

§  2617,  et  seq.  §  42. 

Colorado,  1  Mill's  Stat.  1891,  §2234.  New  York,  R.  S.,  8th  ed.,  vol.  3,  p. 

Dakota,    Compiled    Laws,    1887,    §  1661,  §  3. 

3103.  North  Dakota.     See  Dakota. 

Iowa,  McClain's  Stat.  1888,  §§  1724,  Ohio,  R.   S.   1890,  vol.   1,  §  3664,  et 

1731.  seq. 

Kansas,    Gen.    Stat.    1889,    vol.    1,  Oklahoma.     See  Stat.  1890,  §  3112. 

§3435.  South  Dakota.     See  Dakota. 

Michigan,  Public  Acts,  1887,  ch.  305,  Wisconsin,    Sanborn   &   B.    Annot. 

§  17.  Stat.  1889,  vol.  1,  §  1946,  i, 

XIV. 

"Return  of  Unearned  Premiums. 

The  following  States  have  adopted  laws  providing  that  fire  insurance 
companies  in  case  of  total  loss  shall  return  the  unearned  premium  where 
the  loss  is  less  than  the  amount  of  the  policy. 

The  Washington  statute  is  given  as  a  specimen  : 

"In  the  event  of  the  total  destruction  of  any  insured  building,  on 
whicli  the  amount  of  the  appraised  or  agreed  loss  shall  be  less  than  the 
total  amount  insured  thereon,  the  insurance  company  or  companies  shall 
return  to  the  insured  the  unearned  premium  for  the  excess  of  insurance 


576  Appendix.  a  L 

over  the  appraised  or  agreed  loss,  to  be  paid  at  the  same  time  and  in  the 
same  manner  as  the  loss  shall  be  paid." 

Idaho,  H.  S.  1887;'  §  2759.  Oregon,    Hill's    Annot.    Stat.   1887, 

Louisiana,  Acts,  1888,  No.  149.  vol.  2,  §  3585. 

Nevada,  Qen.  Stat.  1885,  §  993.  Washington,   Hill's  Stat.  1891,  voL 

1,  §  2740.  . 


LiFa  IssuBAiroB. 

XV. 

Protection  of  Wife  and  Children. 

The  following  States  have  adopted  laws  protecting  beneficiaries,  if 
wife  and  children,  against  creditors  and  acts  of  the  insured. 

The  New  York  statute  is  given  as  a  specimen  : 

"  It  shall  be  lawful  for  any  married  woman,  by  herself  and  in  her  name, 
or  in  the  name  of  any  third  person,  with  his  assent,  as  her  trustee,  to  cause 
to  be  insured,  for  her  sole  use,  the  life  of  her  husband,  for  any  definite 
period,  or  for  the  term  of  his  natural  life;  and,  in  case  of  her  surviving 
such  period  or  term,  the  sum  or  net  amount  of  the  insurance  becoming 
due  and  payable,  by  the  terms  of  the  insurance,  shall  be  payable  to  her  to 
and  for  her  own  use,  free  from  the  claims  of  the  representatives  of  the 
husl^and,  or  of  any  of  his  creditors,  or  any  party  or  parties  claiming  by, 
through  or  under  him.  But  when  the  premium  paid  in  any  year  out  of 
the  property  or  funds  of  the  husband  shall  exceed  five  hundred  dollars, 
such  exemption  from  such  claims  shall  not  apply  to  so  much  of  said  pre- 
mium so  paid  as  shall  be  in  exc(!ss  of  five  hundred  dollars,  but  such  excess, 
with  the  interest  thereon,  shall  inure  to  the  benefit  of  his  creditors." 

Alabama,  Code,  1886,  vol.  1,  §  2356.  Missouri,  R.  S.  1889,  §§  5851-6854. 

Connecticut,  Gen.  Stat.  1888,  §2799.  New  Hampshire,  Gen.   Laws,   1878, 
Delaware,  Rev.Code,  1874,  ch.  76,  §3.         ch.  175,  §  1. 

Florida,  McClellan's  Digest,  1881,  p.  New  York,  R.  S.,  8th  ed.,vol.  4,  pp. 

534,  §  22.  2602-3. 

Illinois,  R.  S.  1891,  p.  839,  §  54.  Ohio,   R.   S.   1890,  vol.   1,  §§  3628- 
Kansas,  Gen.  Stat.  1889,  vol.  1,  §  3401.         3829. 

Kentucky,  Public  Acts,  1869-70,  ch.  Oklahoma,     Stat.     1890,    p.    636,    \ 

645,  §§  30-31.  19. 

Maryland,   Code,   Pub.    Gen.   Laws,  Pennsylvania,    Brightly's    Purdon's 

1888,  vol.  1,  p.  321,  §  117,  and  p.         Digest,    1883,    vol.    1,    p.    914,    ^ 

803.  §§  8-10.  54. 

Michigan,  Gen.  Stat.  1882,  §§  4238,  Rhode  Island,  Pub.  Stat.  1882,  chap. 

6300,  6301.  166.  §  21. 


u.  f 


Appendix. 


677 


South      Arolina,  Gen.    Stat.  1882,    §     West  Virginia,   Code,   1887,  ch.  66, 
135b,  §§  5-6  as  amended  by  Acts,  1891, 

p.  325  (ch.  109). 
Wisconsin,    lSanl)oiii    &    B.     Annot, 
Stat.  1889,  vol.  1,  §2347.  Amend- 
ed   by   Laws,    1891,    vol.    1,    ch. 
376. 


South  Likota,   Laws,   1890,  ch.  86, 

§4. 
Tennessee  ,  Code,  1884,  §§3335,  8336. 
Vermont,  Rev.  Laws,  1880,  §§  2340- 

2343. 


XVI. 

Protection  of  all  Benefida/ries. 

The  foKjwing  States  have  adopted  laws  securing  to  the  beneficia- 
ries in  certfc.n  cases  the  proceeds  of  life  insurance  free  from  creditors, 
etc. 

The  New  York  statute  is  given  as  a  specimen : 

"  The  moyiey  or  otlier  benefit,  chanty,  relief  or  aid  to  be  paid,  provided 
or  rendered  wy  any  corjioration,  association  or  society  authorized  to  do 
business  undtr  this  act  shall  be  exempt  from  execution,  and  shall  not  be 
liable  to  be  seized,  taken  or  appropriated  by  any  legal  or  equitable  process, 
to  pay  any  del.t  or  liability  of  a  member." 


California  Laws,  1891,  ch.  116,  §  8. 
Colorado    1  Mi.ls'  St.  1891,  §  2246. 
Iowa,   McClain  s  Stat.    1888,  §  1756 

[1182];  §  35V6  [2372] . 
Kentucky,  Public  Acts,  1869-70,  ch. 

645,  §  32. 
Maine,  R.  S.  1883,  ch.  75,  §  10;  ch. 

49,  §  94. 
Massachusetts,  Acts,  1887,  ch.    214, 

§    73;   Acts,    1888,  ch.  429,   §  15; 

Acts,    1890,  ch.   421,  §  23  (assess- 
ment ins.). 
Michigan,  Public  Acts,  1887,  ch.  187, 

§29. 
Minnesota,  Stat.    189i,  v.  1,  §  3047. 

Also    Gen.   L.    188d,    *h.    184,     § 

17. 


Mississippi,  Code,  1880,  §  1261. 
Missouri,  R.  S.  1889,  §  5867. 
Nevada,  Laws,  1891,  ch.  98,  §  9. 
New  Hampshire,  Gen.  L.  1878,  ch. 

175,  §2. 
New  York,  3  R.  S.,  8th  ed.,  p.  1709. 

§  19  and  p.  1711. 
North  Dakota,  Laws,  1891,  ch.  73,  § 

18  and  ch.   74,  §  15. 
Pennsylvania,    Brightly 's    Purdon'a 

Dig.  1883,  v.  1,  p.  924,  §  106. 
Rhode  Island,  Pub.  Laws,  Jan.,  1889, 

p.  24,  §  8. 
South  Dakota,  Laws,    1890,   p.  130, 

§22. 
Tennessee,  Code,  1884,  §  §  1813,3135. 
Vermont,  Rev.  L.  1880,  §  2345. 


xvn. 

Change  of  Beneficiary. 

The  following  Stittw*  nave  adopted  laws  providing  that  a  member  of 
certain  life  insurance  societies  may  make  a  change  of  beneficiary  without 
consent  of  former  benenciary. 

S7 


578  Appendix.  o.  i. 

The  New  York  statute  is  given  as  a  specimen: 

"  Membership  in  any  corporation,  association  or  society  transacting  the 
business  of  lite  or  casualty  insurance,  or  both,  upon  the  co-operative  or 
assessment  plan,  shall  give  to  any  member  thereof  the  right,  at  any  time, 
with  the  consent  of  such  corporation,  association  or  society,  to  make  a 
change  in  his  payee  or  payees,  beneficiary  or  beneficiaries  without  requiring 
the  consent  of  such  payee  or  beneficiaries." 

Iowa,  McClain's  Code,  1888,  §  1767  Michigan,  Public  Acts,  1887,  ch.  187, 

(L.  1886,  ch.  65,  §7).  §16. 

Kansas,  Gen.  Stat.  1889,  §  3464.         New  York,  3  R.  S.,  8th  ed.,  p.  1709, 

§18. 


xvm. 

Discriminations. 

The  following  States  have  adopted  laws  prohibiting  discriminations  in 
rates  by  life  insurance  companies. 

The  New  York  statute  is  given  as  a  specimen: 

"Life  insurance  companies  doing  business  in  this  State  shall  not  make 
any  discrimination  in  favor  of  individuals  of  the  same  class  and  of  the 
same  expectation  of  life,  either  in  the  amount  of  premium  charged  or  any 
return  of  premium,  dividends  or  other  advantages,  and  no  agent  of  any 
such  insurance  company  shall  make  any  contract  for  insurance,  or  agree- 
ment as  to  such  contract  of  insurance,  other  than  that  which  is  plainly 
expressed  in  the  policy  issued,  nor  shall  any  such  company  or  agent  pay  or 
allow,  or  offer  to  pay  or  allow,  as  inducement  to  any  person  to  insure,  any 
rebates  of  premium  or  any  special  favor  or  advantage  whatever,  in  the  div- 
idends to  accrue  thereon,  or  any  inducement  whatever,  not  specified  in  the 
policy.  Whenever  it  shall  appear  to  the  satisfaction  of  the  superintendent 
of  the  insurance  department,  after  a  hearing  held  by  him  upon  due  notice, 
that  any  company  is  issuing  policies  or  making  contracts  that  are  either 
directly  or  indirectly  a  violation  of  this  act,  he  shall  thereupon,  with  the 
approval  of  the  attorney-general,  in  writing,  require  said  company  and  its 
officers  and  agents  to  refrain,  within  twenty  days,  from  making  or  deliv- 
ering any  such  policy  or  contract;  and  the  making  or  delivering  of  any 
such  policy  or  contract  thereafter,  shall  render  such  company  or  person 
guilty  of  a  misdemeanor,  punishable  as  provided  in  the  third  section  of 
the  act  iiereby  amended.  It  is  further  made  the  duty  of  said  superintend- 
ent, in  case  of  the  failure  of  any  company  or  its  officers  or  agents  to  comjily 
with  said  requirement  within  the  twenty  days,  to  publish  a  notice  of  the 
fact  in  the  State  newspaper  once  a  week  for  four  weeks." 

Colorado,    1    Mills'    Stat.     1891,    §    Connecticut.  Public  Acts,   1889,  ch 
2232.  134. 


O.  L                                       Appendix.  579 

Delnware,  Laws,  1891,  ch.  273.  Oliio.  R.   S.  1890,  vol.    1,  §§  8631-2 

Illinois,  Laws,  1891,  p.  148.  (p.  906). 

Iowa,  Laws  of  1890,  ch.  33.  Pennsylvania,   Laws,   1889,   ch.  116, 

Louisiana,  Acts  of  1886,  No.  82.  §  1. 

Maine,  Public  Acts,  1891,  ch.  128.  Rhodelsland,  Public  Acts,  Jan.  1888, 

Maryland,  Laws,  1890,  ch.  254.  ch.  673. 

Massachusetts,  Acts,  1887,  ch.   214,  Vermont,  Acts,  1888,  p.  126. 

§  68.  West  Virginia,  Acts,  1891,   ch.   108, 

Michigan,  Public  Acts,  1889,  No.  171,  p.  322. 

§  31.  Wisconsin,   Laws,    1891,  vol.   1,   ch. 

New  York,  Laws,  1889,  ch.  282,  §  1,  267. 

as  am'd  by  Laws,  1890,  ch.  401.  Wyoming,  Laws,  1890-91,  ch.  101. 


XIX. 

IHscriminations  against   Colored  Persons. 

The  following  States  have  adopted  laws  prohibiting  discriminatior. 
against  colored  persons,  by  life  insurance  companies. 

The  New  York  statute  is  given  as  a  specimen  : 

"§  1.  No  life  insurance  company  doing  business  within  this  State  shall 
make  any  distinction  or  discrimination  between  white  persons  and  colored 
persons,  wholly  or  partially  of  African  descent,  as  to  the  premiums  or  rated 
charged  for  policies  upon  the  lives  of  such  persons,  or  in  any  other  man- 
ner whatever  ;  nor  shall  any  sticli  company  demand  or  require  a  greater 
premium  from  such  colored  person  than  is  at  that  time  required  by  such 
company  from  white  persons  of  the  same  age,  sex,  general  condition  of 
health  and  prospect  of  longevity;  nor  shall  any  such  company  make  or 
require  any  rebate,  diminution  or  discount  upon  the  amount  to  be  paid  on 
Buch  policy  in  case  of  the  death  of  such  colored  persons  insured,  nor  insert 
in  the  policy  any  condition,  nor  make  any  stipulation  whereby  such  person 
insured  shall  bind  himself,  or  his  heirs,  executors,  administrators  and 
assigns  to  accept  any  sum  less  than  the  full  value  or  amount  of  such  policy 
in  case  of  a  claim  accruing  thereon  by  reason  of  the  death  of  such  person 
insured,  other  than  such  as  are  imposed  upon  white  persons  in  similar 
cases;  and  any  such  stipulation  or  condition  so  made  or  inserted  shall  be 
void. 

"§  2.  The  violation  of  any  part  of  the  first  section  of  this  act  shall  be 
deemed  a  misdemeanor,  and  the  party  or  parties  violating  the  same  shall, 
upon  conviction  thereof,  be  subject  to  a  fine  of  not  less  than  fifty  dollars, 
or  more  than  five  hundred  dollars. " 

Connecticut,  Gen.  Stat.  1888,  §2861.     New  York,  Laws,  1891,  ch.  119. 
Massachusetts,  Acts,  1887,   ch.   214,     Ohio,   R.  S.  1890,  vol.  1,  §§  3681-4 
§§  69,  109.  (p.  906). 


680  AppufTDiz.  a  1 

XX. 

Non-forfeiture. 

The  following  States  have  adopted  non-forfeiture  laws  h  life  insurance. 

The  New  York  statute  is  given  as  a  specimen  : 

"§  1.  Whenever  any  policy  of  life  insurance  hereafter  issued  by  any 
company  organized  or  incorporated  under  the  laws  of  this  State,  after 
being  in  force  three  full  years,  sliall  by  its  terms  lapse  or  become  forfeited 
for  the  non-payment  of  any  premium,  or  of  any  note  given  for  a  |)remium, 
or  loan  made  in  cash  on  the  policy  as  security,  or  of  any  interest  on  such 
note  or  loan,  unless  the  provisions  of  this  act  are  specifically  waived  in  the 
application,  and  notice  of  such  waiver  written  or  printed  in  red  ink  on  the 
margin  of  the  face  of  the  policy  when  issued,  the  reserve  on  such  policy, 
including  dividend  additions,  calculated  at  the  date  of  the  failure  to  make 
any  of  the  payments  above  described,  according  to  the  American  experience 
table  of  mortality,  and  witii  interest  at  the  rate  of  four  and  a  half  percent, 
per  annum,  after  deducting  any  indebtedness  of  the  insured  on  account  of 
any  annual,  semi-annual,  or  quarterly  premium  then  due,  and  any  loan  made 
in  cash  on  such  policy,  evidence  of  which  is  acknowledged  by  the  insured 
in  writing,  shall,  on  demand  made,  with  surrender  of  the  policy  within  six 
months  after  such  lapse,  be  taken  as  a  single  premium  of  life  insurance  at 
the  published  rates  of  the  company  at  the  time  the  policy  was  issued,  and 
shall  be  applied,  as  siiall  have  been  agreed  in  the  application  and  policy, 
either  to  continue  tlie  insurance  of  the  policy  in  force  at  its  full  amount  so 
long  as  such  single  premium  will  purchase  temporary  insurance  for  that 
amount,  at  the  age  of  the  insured  at  the  time  of  lapse,  or  to  purchase  upon 
the  same  life  at  the  same  age,  paid-up  insurance  payable  at  the  same  time, 
and  under  the  same  conditions,  except  as  to  payment  of  premiums,  as  the 
original  policy.  Provided,  that  if  no  such  agreement  be  expressed  in  the 
application  or  policy,  the  said  single  premium  may  be  applied  in  either  n^ 
the  modes  above  specified,  at  the  option  of  the  owner  of  the  policy;  notice 
of  such  option  to  be  contained  in  the  demand  hereinbefore  required  to  be 
made  to  prevent  the  forfeiture  of  the  policy.  Provided,  also,  that  the  net 
▼alue  of  the  insurance  given  for  such  single  premium  under  this  section, 
computed  by  the  standard  of  this  State,  shall  in  no  case  be  less  than  two- 
thirds  of  the  entire  reserve  after  deducting  the  indebtedness  as  specified; 
but  such  insurance  shall  not  participate  in  the  profits  of  the  company. 

"§  2.  If  the  reserve  upon  any  endowment  policy,  applied  according  to 
the  preceding  section  as  a  single  premium  of  temporary  insurance,  be 
more  than  suflBcient  to  continue  the  insurance  to  the  end  of  the  endow- 
ment term  named  in  the  policy,  and  if  the  insured  survive  that  term,  the 
excess  shall  be  paid  in  cash  at  the  end  of  such  term,  on  the  conditions  on 
which  the  original  policy  was  issued." 

California,     Deering's    Civil    Code,     Colorado,   Mills'  Stat.  1891,  v.  1,  % 
%  2766  n.   (Stat.  1871-2,  ch.  62j.  2223. 


a  L  Appendix.  681 

Maine,    R.    8.    1883,    p.    460,    §    91,  Micliigan,  Gen.  Stat.  1883,  vol.  1.  I| 

amended  by  Pub.  Laws,  1887,  ch.  4232. 

71.  Missouri,  R.  S.  1889,  §  5856. 

Massachusetts,  Acts,   1887,  ch.    214,  New    York,    3   R.   S.,   8th    ed.,    p. 

§  76.  1688. 

Most  of  the  otlier  States  liiive  adopted  laws  which  provide  that  nc  poli- 
cies of  iusurunct'  shall  lapse  unless  the  company  shall  have  notifies',  the 
insured  of  the  fact  that  premium  is  due  and  unpaid. 

XXI. 

Effect  of  War. 

Massachusetts  has  enacted  : 

"  No  policy  of  insurance  issued  to  a  citizen  of  the  Commonwealth  by 
an  authorized  company  organized  under  the  laws  of  a  foreign  country  shall 
be  invalidated  by  the  occurrence  of  iiostilities  between  such  foreign  country 
and  the  United  States." 

Mass.  Acts,  1887,  ch.  214,  §  84 

XXII. 

Suicide. 
Missouri  has  enacted  : 

"  In  all  suits  upon  policies  of  insurance  on  life  hereafter  issued  by  any 
company  doing  business  in  this  State,  it  shall  be  no  defense  that  the  insured 
committed  suicide,  unless  it  shall  be  shown  to  the  satisfaction  of  the 
court  or  jury  trying  the  cause,  that  the  insured  contemplated  suicide  at 
the  time  he  made  his  application  for  the  policy,  and  any  stipulation  in  the 
policy  to  the  contrary  shall  be  void." 

Mo.  R.  S.  1889,  vol.  2,  §  5856. 

XXIII. 

Retaliatory  Laws. 

The  following  States  have  adopted  retaliatory  .aws. 

The  New  York  statute  is  given  as  a  specimen  : 

"  Whenever  tiie  existing  or  future  laws  of  any  other  State  of  the 
United  States  shall  require  of  insurance  companies,  incorporated  l)y  or 
organized  under  the  laws  of  this  State,  and  having  agencies  in  such  other 
States,  or  of  the  agents  thereof,  any  deposit  of  securities  in  sucli  State  for 
the  protection  of  policy-holders,  or  otherwise,  or  any  payment  for  taxes, 
fines,  penalties,  certificates  of  authority,  license  fees,  or  otherwise,  greater 
than  the  amount  required  for  such  purposes  from  similar  companies  of 
other  States  by  the  then  existing  laws  of  this  State,  then,  and  in  every 
Buch  case,  all  companies  of  such  States  establishing  or  having  hei'ctofore 
established  an  agency  or  agencies  in  the  State,  shall  be  and  are  hereby 
required  to  make  the  same  deposit  for  a  like  purpose  in  the  insurance 


582 


Appendix. 


a  L 


department  of  the  State,  and  to  pay  the  superintendent  of  said  department 
for  taxes,  fines,  penalties,  certilicates  of  authority,  license  fees  and  other- 
wise, an  amount  equal  to  the  amount  of  such  charges  and  payments  im- 
posed by  the  laws  of  such  State  upon  the  companies  of  this  State  and  the 
agents  thereof.  And  the  superintendent  of  the  insurance  department  is 
hereby  authorized  to  remit  any  of  the  fees  and  charges  whicli  he  is  required 
to  collect  by  existing  laws,  except  such  as  he  is  required  to  collect 
under  and  by  virtue  of  this  act,  provided,  however,  that  no  discrimination 
shall  be  made  in  favor  of  one  company  over  any  other  from  the  same 
State," 


Connecticut,  Gen.  Stat.  1888,  §  2913; 

amended  Pub,  Laws,  1889,  ch.  95; 

see  also  Gen.  Stat.  1888,  §  2835. 
Georgia,  Laws,  1887,  p.  124,  §  12. 
Illinois,  R.  S.  1891  (Cothran),  p.  830, 

^29;  p.    839,   §  55,  and  p,  840g, 

§  63w. 
Indiana,  Acts,  1889,  ch.  169,  §  2. 
Iowa,  McClain's  Code,  1888,  §  1717 

(1154). 
Kausas.Gen.  Stat.  1889,  vol.  1.  §3330. 
Kentucky,  Public  Acts,  1869-70,  ch. 

645,  §  47. 
Maine,  Pub.  Acts,  1889,  ch.  237,  §  12. 
Maryland,  Code,   Pub.   Gen.    Laws, 

1888,  vol.  1,  p.  340,  §  138. 
Massachusetts,  Acts,   1885,  ch.   183, 

§  9;  Acts,  1887,  ch.  214,  §  85. 
Michigan,  Gen.    Stat.    1882,  vol.   1, 

§4243;  Public  Acts,  1887,  ch.  187, 

§17. 
Minnesota,  Stat.  1891,  vol.  1,  §2907. 
Missouri,  R.  S.  18S9,  §  5932. 
Montana,  Comp.  Stat.  1887,  p.  782,  § 

596. 
Nebraska,  Comp.  Stat.  1891,  ch.  43, 

§  83. 


Nevada,  Laws.  1891,  ch.  98,  §  7. 
New  Hampshire,  Laws,  1890-91,  ch. 

54. 
New  Jersey,  Revision,  1877,  p.  508, 

§10. 
New  Mexico,   Comp.  Laws,   1884,  § 

1486. 
New  York,  3  R.  S.  8th  ed.,  p.  1617. 
NorthDakota,Laws,1891,p.209,  §11. 
Ohio,  R.  S.  1890,  §  282. 
Oklahoma,  Stat.   1890,  p.  630,  §  29; 

p.  636,  §  20. 
Pennsylvania,  Laws,  1887,  p.  335,  §  1. 
Rhode  Island,  Pub.   Stat.   1882,  ch. 

156,  §  23. 
South  Dakota,Laws,1890,p.  131,§27. 
Tennessee,  Code,  1884,  §2580;  Acts, 

1891,  ch.  47,  §  10. 
Texas,  Sayles'  Civil  Stat.  1888,  vol. 

2,  §  2948. 
Vermont,   Rev.  Laws,  1880,  §  3627; 

Laws,  1888,  p.  125. 
Virginia,  Code,  1887,  §  1279. 
West  Virginia,  Acts,  1891,  p.  323. 
Wisconsin,    Sanborn    &   B.    Annot. 

Stat.  1889,  vol.  1,  §  1221. 
Wyoming,  R.  S.  1887,  §  635. 


XXIV. 

Anti' Compact  Law$. 

The  following  States  have  adopted  anti-compact  laws. 

The  New  Hampshire  statute  is  given  as  a  specimen: 

"  Should  any  insurance  company  not  organized  under  the  laws,  but 


a  L  Appendix.  583 

tloing  an  Insurance  Imsiness  within  this  State,  make  an  application  to 
remove  any  suit  or  action  to  which  it  is  a  party,  heretofore  or  hereafter 
commenced  in  any  court  of  this  State,  to  the  United  States  Digtiict  or 
Circuit  Court,  or  sluiil  enter  into  any  compact  or  combination  with  other 
insurance  companies  for  tlie  jiurpose  of  governing  or  controlling  the  rates 
cliarged  for  fire  insurance  on  any  property  witliin  this  State,  the  insurance 
commissioner  shall  forthwith  revoke  the  license  or  authority  of  said  com- 
pany to  transact  business,  and  no  renewal  of  said  license  or  authority  shall 
be  granted  for  the  period  of  three  years  from  the  date  of  sucli  revocation." 

Georgia,  Laws,  tK90-91._voL,l.-P-  206.  Nebraska.  Comp.  Stat.,  1891,  oh.  91a. 
Kansas,    Gen.    Stat.,    1889,  vol.    1,    §    New  Hampshire,  Laws,  1885,  ch.  93. 

2499.  Ohio,  R.  S.,  1892,  §  3659. 

Michigan,     Howell's     Stat.     Suppl., 

1883-89,  g  4340  c. 

Compare  the  following   more  general  statutes   against  pools,   trusts,  or 

combinations  to  fix  prices  of  articles  or  to  restrain  trade  : 

Alabama.  Acts,  1891,  No.  202.  Minnesota.  Gen.  Laws,  1891,  ch.  10. 

California,  Deering's  Codes  and  Stat.,  Mississippi.  Gen.  Laws,  1890,  ch.  36. 

1885,  vol.  2,  8  1673.  Missouri,  Laws,  1891,  p.  186. 

District    of    Columbia.      See    United  New  Mexico,  Acts,  1891,  ch.  10. 

States.  North  Dakota,  Laws,  1890,  ch.  174, 

Illinois,  Laws.  1891,  p.  206.  South  Dakota,  Laws,  1890,  ch.  154. 

Iowa,  Gen.  Laws,  1890,  ch.  28.  Tennessee,  Acts,  1891,  ch.  218. 

Kentucky,  Pub.  Acts,  1890,  ch.  1621.  Texas,  Gen.  Laws   1889,  ch.  117. 

Louisiana,  Acts,  lo90.  No.  86.  United  States,  Stat,  at  Large,  vol.  26, 
Maine,  Pub.  Acts,  1889,  ch.  266.  ch.  647,  p.  209. 

Michigan,  Pub.  Acts,  1889,  No.  225. 

Note. — The  New  York  statutes  relating  to  insurance  have  been  incorpor- 
ated  into  one  general  insurance  law  (Laws,  1S92,  ch.  690,  viz.  ch.  38  of  the 
General  Laws).  The  New  York  statutes  cited  in  this  appendix  will  be  found 
embodied  with  trilling  changes  of  phraseology  in  that  general  law. 


CHAPTER  II. 
L 

U  Standard  Form  of  Fire  Liaurance  Policy  for  New  Torh  State. 

\\    \  The Insurance  Company,  in  consideration  of  the  stipulations 

herein  named  and  of dollars  premium,  does  insure for 

tlie  term  of from  the day  of ,  189. .,  at  noon, 

to  tlie day  of ,  189. .,  at  noon,  against  all  direct  loss  or 

damage  by  fire,  except  as  hereinafter  provided,  to  an  amount  not  exceed- 
ing   dollars,  to  the  following  described  property  while  locate'3 

and  contained  as  described  herein,  and  not  elsewhere,  to  wit : — 

(Description  of  property  insured.) 

This  company  shall  not  be  liable  beyond  the  actual  cash  value  of  the 
property  at  the  time  any  loss  or  damage  occurs,  and  tlie  loss  or  damage 
shall  be  ascertained  or  estimated  according  to  such  actual  cash  value,  with 
proper  deduction  for  deprecitition  however  caused,  and  shall  in  no  event 
exceed  what  it  would  then  cost  the  insured  to  repair  or  replace  the  same 
with  material  of  like  kind  and  quality;  said  ascertainment  or  estimate 
shall  be  made  by  the  insured  and  tiiis  company,  or,  if  they  differ,  then  by 
appraisers,  as  hereinafter  provided;  and,  the  amount  of  loss  or  damage 
having  been  thus  determined,  the  sum  for  wiiich  this  company  is  liable 
pursuant  to  this  policy  shall  be  payable  sixty  days  after  due  notice,  ascer- 
tainment, estimate,  and  satisfactory  proof  of  the  loss  have  been  received 
by  this  company  in  accordance  with  the  terms  of  this  policy.  It  shall  be 
optional,  however,  with  tliis  company  to  take  all,  or  any  part,  of  the 
articles  at  sncii  ascertained  or  appraised  value,  and  also  to  repair,  rebuild, 
or  replace  the  property  lost  or  damaged  with  other  of  like  kind  and  quality 
within  a  reasonai)le  time  on  giving  notice,  within  thirty  days  after  the 
receipt  of  tlie  proof  iierein  required,  of  its  intention  so  to  do;  but  there 
can  be  no  abandonment  to  this  company  of  the  property  described. 

This  entire  policy  shall  be  void  if  the  insured  has  concealed  or  mis- 
represented, in  writing  or  otherwise,  any  material  fact  or  circumstance 
concerning  this  insurance  or  the  subject  thereof;  or  if  the  interest  of  the 
insured  in  the  property  be  not  truly  stated  herein ;  or  in  case  of  any  fraud 
or  false  swearing  by  the  insured  touching  any  matter  relating  to  this  insur- 
ance or  the  subject  thereof,  whether  before  or  after  a  loss 

This  entire  policy,  unless  otherwise  provided  by  agreement  indorsed 


0.  II. 


Appendix.  585 


hereon  or  added  hereto,  shall  he  void  if  the  insured  now  has  or  shall  lieio 
after  make  or  procure  any  other  contract  of  insurance,  whetlier  valid  or 
not,  on  property  covered  in  wlioU;  or  in  part  by  this  policy;  or  if  the  sul»- 
ject  o£  insurance  be  a  manufacturing  establishment,  and  it  be  operated  iu 
whole  or  in  part  at  night  later  than  ten  o'clock,  or  if  it  cease  to  be  operated 
for  more  than  ten  consecutive  days;  or  if  the  hazard  be  increased  by  any 
means  within  the  control  or  knowledge  of  the  insured;  or  if  mechanics  be 
employed  in  building,  altering,  or  repairing  the  within  described  premises 
for  more  than  fifteen  days  at  any  one  time  ;  or  if  the  interest  of  the  insured 
be  other  than  unconditional  and  sole  ownership ;  or  if  the  subject  of  insur- 
ance be  a  building  on  ground  not  owned  by  the  insured  in  fee-simple;  or 
if  tlie  subject  of  insurance  be  personal  property  and  be  or  become  encum- 
bered by  a  chattel  mortgage;  or  if,  with  the  knowledge  of  the  insured, 
foreclosure  proceedings  be  commenced  or  notice  given  of  sale  of  any 
property  covered  by  this  policy  by  virtue  of  any  mortgage  or  trust  deed ; 
or  if  any  change,  other  tlian  by  the  death  of  an  insured,  take  place  in  the 
interest,  title,  or  possession  of  the  subject  of  insurance  (except  change  of 
occupants  without  increase  of  hazard),  whether  by  legal  process  or  judg- 
ment or  by  voluntary  act  of  the  insured,  or  otherwise;  or  if  this  policy  be 
assigned  before  a  loss;  or  if  illuminating  gas  or  vapor  I)e  generated  in  the 
described  building  (or  adjacent  thereto)  for  use  tlierein ;  or  if  (any  usage 
or  custom  of  trade  or  manufacture  to  the  contrary  notwithstanding)  there 
be  kept,  used,  or  allowed  on  tlie  above  described  premises,  l)enzine,  ben- 
zole, dynamite,  ether,  fireworks,  gasoline,  greek  fire,  gunpowder  exceeding 
twenty-five  pounds  in  quantity,  naphtha,  nitro-glycerine  or  other  explo- 
sives, phosphorus,  or  petroleum  or  any  of  its  products  of  greater  inflamma- 
bility than  kerosene  oi)  of  the  United  States  standard  (which  last  may  be 
used  for  liglits  and  kept  for  sale  according  to  law,  but  in  quantities  not 
exceeding  five  barrels,  provided  it  be  drawn  and  lamps  filled  by  daylight 
or  at  a  distance  not  less  than  ten  feet  from  artificial  ligiit) ;  or  if  a  building 
herein  described,  whether  intended  for  occupancy  by  owner  or  tenant,  be 
or  become  vacant  or  unoccupied  and  so  remain  for  ten  days. 

This  company  shall  not  be  liable  for  loss  caused  directly  or  indirectly 
by  invasion,  insurrection,  riot,  civil  war  or  commotion,  or  military  or 
usurped  power,  or  by  order  of  any  civil  authority ;  or  by  theft ;  or  by  neg- 
lect of  the  insured  to  use  all  reasonable  means  to  save  and  preserve  the 
property  at  and  after  a  fire,  or  when  the  property  is  endangered  by  fire  in 
neigliboring  premises;  or  (unless  fire  ensues,  and,  in  tliat  event,  for  the 
damage  by  fire  only)  by  explosion  of  any  kind,  or  lightning;  but  liability 
for  direct  damage  by  lightning  may  be  assumed  by  specific  agreement 
hereon. 

If  a  building  or  any  part  thereof  fall,  except  as  the  result  oi  fire,  all 
insurance  by  this  policy  on  such  building  or  its  contents  shall  immediately 
cease. 

This  company  shall  not  be  liable  for  loss  to  accounts,  bills,  currency, 
deeds,  evidences  of  debt,  money,  notes,  or  securities;  nor,  unless  liability 
\»  specifically  assumed  hereon,  for  loss  to  awnings,  bullion,  casts,  curioai- 


586  Appendix.  c.  ii. 

ties,  drawings,  dies,  implements,  jewels,  manuscripts,  medals,  models, 
patterns,  pictures,  scientific  apparatus,  signs,  store  or  office  furniture  or 
fixtures,  sculpture,  tools,  or  property  held  on  storage  or  for  repairs ;  nor  be- 
yond the  actual  value  destroyed  by  fire,  for  loss  occasioned  by  ordinance 
or  law  regulating  construction  or  repair  of  buildings,  or  by  interruption 
of  business,  manufacturing  processes,  or  otherwise;  nor  for  any  greater 
proportion  of  the  value  of  plate  glass,  frescoes,  and  decorations  than  that 
which  this  policy  shall  bear  to  the  whole  insurance  on  the  building  de- 
scribed. 

If  an  application,  survey,  plan,  or  description  of  property  be  referred 
to  in  this  policy,  it  shall  be  a  part  of  this  contract  and  a  warranty  by  the 
insured. 

In  any  matter  relating  to  this  insurance,  no  person,  unless  duly  author- 
ized in  writing,  shall  be  deemed  the  agent  of  this  company. 

This  policy  may  by  a  renewal  be  continued  under  the  original  stipula- 
tions, in  consideration  of  premium  for  the  renewed  term,  provided  that 
any  increase  of  liazard  must  be  made  known  to  this  company  at  the  time 
of  renewal  or  tliis  policy  shall  be  void. 

This  policy  shall  be  canceled  at  any  time  at  the  request  of  the  insured ; 
or  by  the  company  by  giving  five  days'  notice  of  such  cancellation.  If 
this  policy  shall  be  canceled  as  hereinbefore  provided,  or  become  void  or 
cease,  the  premium  having  been  actually  paid,  the  unearned  portion  shall 
be  returned  on  surrender  of  this  policy  or  last  renewal,  tliis  company  re- 
taining the  customary  short  rate;  except  that  when  this  policy  is  canceled 
by  this  company  by  giving  notice  it  shall  retain  only  tlie  pro  rata  pre- 
mium. 
I  S'  o  If,  with  the  consent  of  this  company,  an  interest  under  this  policy  shall 
exist  in  favor  of  a  mortgagee  or  of  any  person  or  corporation  having  an 
interest  in  the  subject  of  insurance  other  than  the  interest  of  the  insured 
as  described  herein,  the  conditions  hereinbefore  contained  shall  apply  in 
the  manner  expressed  in  such  provisions  and  conditions  of  insurance  re- 
lating to  such  interest  as  shall  be  wi'itten  upon,  attached,  or  appended 
hereto. 
I  5  ^If  property  covered  by  this  policy  is  so  endangered  by  fire  as  to  require 
rernoval  to  a  place  of  safety,  and  is  so  removed,  that  part  of  this  policy 
in  excess  of  its  proportion  of  any  loss  and  of  the  value  of  property  remain- 
ing in  the  original  location,  shall,  for  the  ensuing  five  days  only,  cover 
the  property  so  removed  in  the  new  location ;  if  removed  to  more  than  one 
location,  such  excess  of  this  policy  shall  cover  therein  for  such  five  days 
in  the  proportion  that  the  value  in  any  one  such  new  location  bears  to  the 
value  in  all  such  new  locations;  but  this  company  shall  not,  in  any  case  of 
removal,  whether  to  one  or  more  locations,  be  liable  beyond  the  proportion 
that  the  amount  hereby  insured  shall  bear  to  the  total  insurance  on  the 
whole  property  at  the  time  of  fire,  whether  tlie  same  cover  in  new  location 
or  not. 

,  0  If  fire  occur  the  insured  shall  give  immediate  notice  of  any  loss  thereby 
1  in  writing  to  this  company,  protect  the  property  from  further  damage, 


a  II.  Appendix.  587 

forthwith  separate  tlie  damaged  and  undamaged  personal  property,  put  it 
in  the  best  possible  order,  make  a  complete  inventory  of  the  same,  stating 
the  quantity  and  cost  of  eacli  article  and  the  amount  claimed  thereon; 
and,  within  sixty  days  after  the  fire,  unless  such  time  is  extended  ir. 
writing  by  this  company,  siiall  render  a  statement  to  this  company,  signed 
and  sworn  to  by  said  insured,  stating  the  knowledge  and  belief  of  the  in- 
sured as  to  the  time  and  oiigin  of  the  fire;  the  interest  of  the  insured  and 
of  all  others  in  the  property;  the  cash  value  of  each  item  thereof  and  the 
amount  of  loss  thereon;  all  incumbrances  thereon;  all  otlier  insurance,  '. 
whether  valid  or  not,  covering  any  of  said  property ;  and  a  copy  of  all 
the  descriptions  and  schedules  in  all  policies;  any  changes  in  the  title, 
use,  occupation,  location,  possession,  or  exposures  of  said  property  since 
the  issuing  of  this  policy;  by  whom  and  for  what  purpose  any  building 
herein  described  and  the  several  parts  thereof  were  occupied  at  the  time 
of  fire;  and  shall  furnish,  if  required,  verified  plans  and  specifications  of 
any  building,  fixtures,  or  machinery  destioyed  or  damaged;  and  shall  also, 
if  required,  furnish  a  certificate  of  the  magistrate  or  notary  public  (not 
interested  in  the  claim  as  a  creditor  or  otherwise,  nor  related  to  the  in- 
surbil)  living  nearest  the  place  of  fire,  stating  that  he  has  examined  the 
circumstances  and  believes  the  insured  has  honestly  sustained  loss  to  the 
amount  that  such  magistrate  or  notary  public  shall  certify. 

/(^  /  The  insured,  as  often  as  required,  shall  exhibit  to  any  person  desig- 
nated by  this  company  all  that  remains  of  any  property  herein  described, 
and  submit  to  examinations  under  oath  by  any  person  named  by  this  com- 
pany, and  subscribe  the  same;  and,  as  often  as  required,  shall  produce  for 
examination  all  books  of  account,  bills,  invoices,  and  other  vouchers,  or 
certified  copies  thereof  if  originals  be  lost,  at  such  reasonable  place  as  may 
be  designated  by  this  company  or  its  representative,  and  shall  permit  ex- 
tracts and  copies  thereof  to  be  made. 

y/  *V  In  the  event  of  disagreement  as  to  the  amount  of  loss  the  same  shall, 
fts  above  provided,  be  ascertained  by  two  competent  and  disinterested 
Jippraisers,  the  insure«.  and  this  company  each  selecting  one,  and  the  two 
so  chosen  shall  first  select  a  competent  and  disinterested  umpire;  the 
appraisers  together  shall  then  estimate  and  appraise  the  loss;  stating 
separately  sound  value  and  damage,  and,  failing  to  agree,  shall  submit 
their  differences  to  the  umpire;  and  the  award  in  writing  of  any  two 
shall  determine  the  amount  of  such  loss;  the  parties  thereto  shall  pay  the 
appraiser  respectively  selected  by  them,  and  shall  bear  equally  the  expenses 
of  the  appraisal  and  umpire. 
/^  ^This  company  shall  not  be  held  to  have  waived  any  provision  or  con- 
dition of  this  policy  or  any  forfeiture  thereof  by  any  requirement,  act,  or 
proceeding  on  its  part  relating  to  the  appraisal  or  to  any  examination 
herein  provided  for;  and  the  loss  shall  not  become  payable  until  sixty  days 
after  the  notice,  ascertainment,  estimate,  and  satisfactory  proof  of  the  loss 
herein  required  have  been  received  by  this  company,  including  an  award 
by  appraisers  when  appraisal  has  been  required. 
,  ^  Pfihia  company  shall  not  be  liable  under  this  policy  for  a  greater  propor- 


\^< 


'     Bill 


588  Appendix.  o.  ii. 

tion  of  any  loss  on  the  described  property,  or  for  loss  by  and  expense  of 
removal  from  premises  endangered  l)y  fire,  than  the  amount  hereby  insured 
shall  bear  t;)  tl.  whole  insurance,  whether  valid  or  not,  or  by  solvent  or 
insolvent  insurers,  covering  such  property,  and  the  extent  of  the  applica- 
tion of  the  insurance  under  this  policy  or  of  the  contribution  to  be  made 
by  this  company  in  case  of  loss,  may  be  provided  for  by  agreement  or 
condition  written  hereon  or  attached  or  appended  hereto.*4» Liability  for 
reinsurance  shall  be  as  specifically  agreed  hereon. 
1  \p  If  this  company  shall  claim  that  the  fire  was  caused  by  the  act  or  neglect 
'  of  any  person  or  corporation,  private  or  municipal,  this  company  shall,  on 
payment  of  the  loss,  be  subrogated  to  the  extent  of  such  payment  to  all 
right  of  recovery  by  the  insured  for  the  loss  resulting  therefrom,  and  such 
right  shall  be  assigned  to  this  company  by  the  insured  on  receiving  such 
payment. 

No  suit  or  action  on  this  policy,  for  the  recovery  of  any  claim,  shall  be 
Bustainable  in  any  court  of  law  or  equity  until  after  full  compliance  by  the 
insured  with  all  the  foregoing  requirements,  nor  unless  commenced  withiu 
twelve  months  next  after  the  fire. 

Wherever  in  this  policy  the  word  "insured  "  occurs,  it  shall  be  held  to 
include  the  legal  representative  of  the  insured;  and  wherever  the  word 
"loss"  occurs,  it  shall  be  deemed  the  equivalent  of  "loss  or  damage." 
\  {  ^.  If  this  policy  be  made  by  a  mutual  or  other  company  having  special 
regulations  lawfully  applicable  to  its  organization,  membership,  policies, 
or  contracts  of  insurance,  such  regulation  shall  apply  to  and  form  a  pait 
of  this  policy  as  the  same  may  be  written  or  printed  upon,  attached,  or 
appended  hereto. 
f\  0  This  policy  is  made  and  accepted  subject  to  the  foregoing  stipulations  and 
\  'conditions,  together  with  such  other  provisions,  agreements,  or  conditions 
as  may  be  indorsed  hereon  or  added  hereto,  and  no  officer,  agent,  or  other 
representative  of  this  company  shall  have  power  to  waive  any  provision  or 
condition  of  this  policy  except  such  as  by  the  terms  of  this  policy  may  be 
the  subject  of  agreement  indorsed  hereon  or  added  hereto,  and  as  to  such 
provisons  and  conditions  no  officer,  agent,  or  representative  shall  have  such 
power  or  be  deemed  or  held  to  have  waived  such  provisions  or  conditions 
unless  such  waiver,  if  any,  shall  be  written  upon  or  attached  hereto,  nor 
shall  any  privilege  or  permission  affecting  the  insurance  under  this  policy 
exist  or  be  claimed  by  the  insured  unless  so  written  or  attached. 

In  Witness  Whereof,  this  company  has  executed  and  attested  these 
presents,  this day  of 189. .. 

A  Form  of  Mortgagee  Clause. 

Loss  or  damage,  if  any,  under  this  policy,  shall  be  payable  to 

fts  mortgagee  [or  trustee],  as  interest  may  appear,  and   this   insurance,  as 
to  the  interest  of  the  mortgagee  [or  trustee]  only   therein,  shall  not  be 


o.  II.  Appendix.  589 

invalidated  by  any  act  or  neglect  of  the  mortgagor  or  owner  of  the  witliin 
described  property,  nor  by  any  foreclosure  or  other  proceedings  or  notice 
of  sale  relating  to  tlie  property,  nor  by  any  change  in  tlie  title  or  owner- 
ship of  tlie  property,  nor  l>y  the  occupation  of  the  premises  for  purposes 
more  hazardous  than  are  permitted  by  tliis  policy;  Provided,  that  in  case 
the  mortgagor  or  owner  sliall  neglect  to  pay  any  premium  due  under  tliis 
policy,  the  mortgagee  [or  trustee]  shall,  on  demand,  pay  the  same. 

Provided  also,  that  the  mortgagee  [or  trustee]  shall  notify  this  com- 
pany of  any  change  of  ownership  or  occupancy  or  increase  of  hazard 
which  shall  come  to  the  knowledge  of  said  mortgagee  [or  trustee]  and, 
unless  permitted  by  this  policy,  it  shall  be  noted  thereon,  and  the  mort- 
gagee [or  trustee]  shall,  on  demand,  pay  the  premium  for  such  increased 
hazard  for  the  term  of  the  use  thereof;  otherwise  this  policy  shall  be  null 
and  void. 

This  company  reserves  the  right  to  cancel  this  policy  at  any  time  as 
provided  by  its  terms,  but  in  sucli  case  this  policy  shall  continue  in  force 
for  the  benefit  only  of  the  mortgagee  [or  trustee]  for  ten  days  after  notice 
to  the  mortgagee  [or  trustee]  of  such  cancellation  and  shall  then  cease, 
and  this  company  shall  have  the  right,  on  like  notice,  to  cancel  this  agree- 
ment. 

Whenever  this  company  shall  pay  the  mortgagee  [or  trustee]  any  sum 
for  loss  or  damage  under  this  policy,  and  shall  claim  that,  as  to  the  mort- 
gagor or  owner,  no  liability  therefor  existed,  this  company  shall,  to  the 
extent  of  such  payment,  be  thereupon  legally  subrogated  to  all  the  rights 
of  the  party  to  wiiom  sucli  payment  shall  be  made,  under  all  securities 
held  as  collateral  to  the  mortgage  debt,  or  may,  at  its  option,  pay  to  the 
mortgagee  [or  trustee]  the  whole  principal  due  or  to  grow  due  on  the 
mortgage  with  interest,  and  shall  thereupon  receive  a  full  assignment  and 
transfer  of  the  mortgage  and  of  all  such  other  securities;  but  no  subroga- 
tirn  shall  impair  the  right  of  the  mortgagee  [or  trustee]  to  recover  the  full 
amount  of  his  claim. 

m. 

A  Form  of  Co-Insurance  Clause. 

If  at  the  time  of  fire  the  whole  amount  of  insurance  on  the  property 
covered  by  this  policy  shall  be  less  than  the  actual  cash  value  thereof,  this 
company  shall,  in  case  of  loss  or  damage,  be  liable  for  such  portion  only  of 
the  loss  or  damage  as  the  amount  insured  by  this  policy  shall  bear  to  the 
actual  cash  value  of  such  property. 

IV. 

A  Form  of  Percentage  Co-Insurance  and  Limitation  Clause. 

If  at  the  time  of  fire  the  whole  amount  of  insurance  on  the  property 

covered  by  this  policy  shall  be  less  than   per  cent,  of  the  actual 

cash  value  thereof,  this  compauy  sliall  in  case  of  loss  or  damage  be  liable 


590  Appendix.  o.  ii. 

for  such  portion  only  of  the  loss  or  damage  as  the  amount  insured  by  this 

policy  shall  bear  to  the  said per  cent,  of  the  actual  cash  value  of 

such  property ;  Provided,  that  in  case  the  whole  insurance  shall  exceed 

per  cent,  of  the  actual  cash  value  of  the  property  covered  by  this 

policy,  this  company  sliall  not  be  liable  to  pay  more  than  its  pro  rata  share 

of  said     per  cent,  of  the  actual  cash  value  of  such  property;  and 

should  the  whole  insurance  at  the  time  of  fire  exceed  the  said  per  cent.,  a 
pro  rata  return  of  premium  on  such  excess  of  insurance  from  the  time  of 
the  fire  to  the  expiration  of  this  policy  shall  be  made  on  surrender  of  the 
policy. 

V. 

A  Form  of  Average  Clause. 

It  is  understood  and  agreed,  that  the  amount  insured  by  this  policy 
shall  attach  in  each  of  the  above  named  premises,  in  that  proportion  of 
the  amount  hereby  insured,  that  the  value  of  property  covered  by  this 
policy,  contained  in  each  of  said  places,  shall  bear  to  the  value  of  such 
property  contained  in  all  of  above  named  premises. 

VI. 

A  Form  of  Open  Policy. 

The Insurance  Company,  in  consideration  of  the  stipulation 

herein  named  and  of  the  several  sums  to  be  specified  and  indorsed  hereon, 

does  insure for  such  time  as  may  be  specified  hereon  from  the  day 

of  commencement,  at  noon,  to  the  day  of  termination,  at  noon,  against  all 
direct  loss  or  damages  by  fire,  except  as  hereinafter  provided,  to  an 
amount  not  exceeding  the  sum  or  sums  insured,  as  specified  and  indorsed 
hereon,  to  the  following  described  property  while  located  and  contained 
as  described  herein,  and  not  elsewhere,  to  wit  : 

On  goods,  wares,  merchandise,  produce,  or  other  property,  hazardous, 
not  hazardous,  or  extra  hazardous  (according  to  the  classification  of  the 
New  York  Board  of  Fire  Underwriters)  his  own,  or  held  by  him  in  trust, 
or  on  commission,  or  sold,  but  not  delivered,  as  shall  be  specified  and  in- 
dorsed hereon  by  this  company  and  for  such  amounts,  in  such  storehouses 
and  places,  and  at  such  rates  of  premium  as  sliall  be  approved  and  so  in- 
dorsed hereon,  or  in  a  book  attached  hereto,  by  one  of  the  ofiicers  of  this 
company,  or  by  the  duly  authorized  agent  at 

(The  conditions  are  those  of  the  standard  form.) 

vn. 

Floating  Policy. 

(Form  of  description  of  property  insured) : 
A 

On   merchandise,  hazardous,  not  hazardous,  and  extra  hazardous,  his 


o.  II.  Appendix.  591 

own,  or  held  by  him  in  trust  ;)r  on  commission,  or  on  joint  account  witli 
others,  or  sold,  but  not  delivered,  in  all  or  any  of  the  brick  or  stone  ware- 
houses, and  while  in  transitu,  in  or  on  any  of  the  streets,  yards  or  wharves, 
in  the  cities  of  New  York,  Brooklyn,  Jersey  City  and  Hoboken,  and  unless 
under  the  protection  of  a  murine  policy  in  any  ship  or  vessel  in  the  porta 
of  said  cities — subject  to  the  following  conditions  of  average. 

It  is  hereby  declared  and  agreed  that  in  case  the  property  aforesaid  in 
all  the  buildings,  places,  or  limits,  included  in  this  insurance,  shall,  at  the 
breaking  out  of  any  fire  or  fires,  be  collectively  of  greater  value  than  the 
sum  insured,  then  this  company  shall  pay  and  make  good  such  a  portion 
only  of  the  loss  or  damage  as  the  sum  insured  shall  bear  to  the  whole 
value  of  the  property  aforesaid,  at  the  time  when  such  fire  or  fires  shall 
first  happen. 

But  it  is  at  the  same  time  declared  and  agreed,  that  if  any  specific 
parcel  of  goods  included  in  the  terms  of  this  policy,  or  such  goods  in  any 
specified  building  or  buildings,  place  or  places,  within  the  limits  of  this 
insurance,  shall  at  the  time  of  any  fire  be  insured  in  this  or  any  other 
office,  this  policy  shall  not  extend  to  cover  the  same,  excepting  only  as  far 
as  relates  to  any  excess  of  value  beyond  the  amount  of  such  specific  insur- 
ance or  insurances,  and  shall  not  be  liable  for  any  loss  unless  the  amount 
of  such  loss  shall  exceed  the  amount  of  such  specific  insurance  or  insur* 
ances,  which  said  excess  only  is  declared  to  be  under  the  protection  of 
this  policy  and  subject  to  average  as  aforesaid. 

It  being  the  true  intent  and  meaning  of  this  agreement,  that  this  com- 
pany shall  not  be  liable  for  any  loss,  unless  the  amount  of  such  loss 
shall  exceed  the  amount  of  the  specific  insurance  or  insurances,  and  then 
only  for  such  excess,  which  said  excess  shall  be  subject  to  average  as  above. 

This  policy  does  not  cover  in  Hudson  River  Railroad  stores,  in  any 
tobacco  inspection  or  other  tobacco  warehouse,  or  in  any  grain  elevator  or 
elevator  store  in  New  York  City,  Brooklyn,  Jersey  City  or  Hoboken. 

(Another  form  of  description): 
B 

On  merchandise,  hazardous,  not  hazardous,  and  extra  hazardous,  his 
own,  or  held  by  him  in  trust  or  on  commission,  or  on  joint  account  with 
others,  or  sold  but  not  delivered,  in  all  or  any  of  the  brick  or  stone  ware- 
houses, and  while  in  transitu,  in  or  on  any  of  the  streets,  yards  or  wharves, 
in  the  cities  of  New  York,  Brooklyn,  Jersey  City  and  Hoboken,  and  unless 
under  the  protection  of  a  marine  policy  in  any  ship  or  vessel  in  the  ports 
of  said  cities — suljject  to  the  following  conditions  of  average. 

It  is  hereby  declared  and  agreed  that  in  case  the  property  aforesaid  in 
all  the  buildings,  places,  or  limits,  included  in  this  insurance,  shall,  at  the 
breaking  out  of  any  fire  or  fires,  be  collectively  of  greater  value  than  the 
sum  insured,  then  this  company  shall  pay  and  make  good  such  a  portion 
only  of  the  loss  or  damage  as  the  sum  insured  shall  bear  to  the  whole 
value  of  the  property  aforesaid,  at  the  time  when  such  fire  or  fires  shall 
first  happen. 


592  Appendix.  c.  ii. 

It  is  further  rleclarerl  and  agreed,  that  goods  in  stores,  warehouses,  and 
other  places,  in  whicli  the  assured  lias  specific  insurance  or  insurances,  are 
not  covered  in  whole  or  in  part  by  this  policy;  and  that  tlie  same  is  not 
intended  to  attach  to  such  goods  in  whole  or  in  part. 

This  policy  does  not  cover  in  Hudson  River  Railroad  Stores,  in  any 
tobacco  inspection  or  otlier  tobacco  wareliouse,  or  in  any  grain  elevator  oi 
elevator  store  in  New  York  City,  Brooklyn,  Jersey  City  or  Hoboken, 

vm. 

Form  of  Clause  for  Insurance  of  Beat. 

% ,  the  rents  of  the  story    roofed   building, 

while  occupied  as and  situate 

Subject  to  the  following  conditions : 

It  is  understood  and  agreed,  that  in  case  the  above-named  building  or 
any  part  thereof  being  occupied  shall  be  rendered  untenantal^le  by  five,  so  as 
to  cause  to  the  assured  an  actual  loss  of  rents,  this  company  shall  be  liable 
for  such  loss  of  rent  ensuing  therefrom,  not  exceeding  the  sum  insured. 

The  assured  hereby  agrees  to  rebuild  or  repair  tlie  premises  in  as  short 
a  time  as  the  nature  of  the  case  will  admit ;  but  if  for  any  reason  this  shall 
not  be  done,  the  limit  of  time  required  for  the  purpose  to  be  determined,  if 
necessary,  by  estimates  of  com])etent  builders  obtained  by  the  company 
and  by  the  assured.  Loss  to  be  computed  from  the  date  of  the  occurrence 
of  said  fire,  not  being  limited  by  day  of  expiration  named  in  policy,  as  to 
flre  occurring  before  such  expiration,  and  cease  on  said  building  being 
rendered  tenantable.  And  the  sum  insured  will  be  taken  as  the  yearly 
rent  of  the  premises,  and  this  company  shall  be  liable  only  for  such  pro- 
portion of  any  loss  as  the  sum  hereby  insured  bears  to  the  actual  annual 
rent  of  the  building. 

It  is  understood  that  the  rental  value  of  that  portion  of  the  above  de- 
scribed premises  occupied  by  the  assured  or  employees  is  covered  by  this 
policy. 

IX. 
Form  of  Clause  for  Insurance  of  Use  and  Occupancy. 

On  the  use  and  occupancy  of  his  mill  buildings,  situate  at 

It  is  a  condition  of  this  contract  of  insurance  that,  if  the  said  buildings 
or  machinery  therein,  or  either  of  them,  or  any  part  thereof,  shall  be  de- 
stroyed, or  so  damaged  by  fire  occurring  during  the  continuance  of  this 
policy  that  the  mill  is  entirely  prevented  from  producing  goods,  this  com- 
pany shall  be  liable  at  the  rate  of dollars  per  day  for  each  work- 
ing day  of  such  prevention,  and  in  case  the  buildings,  or  machinery, 
or  any  part  thereof,  are  so  damaged  as  to  prevent  the  making  of  a  full 
daily  average  production  of  goods,  this  company  is  to  be  liable  per  da^ 


o.  II.  Appendix.  693 

for  that  proportion  of dollars  which  the  product  so  prevented 

from  being  made  bears  to  the  average  daily  yield  previous  to  the  fire, 
which,  for  the  purpose  of  this  insurance  is  agreed  to  be  the  average 
daily  production  of  goods  based  upon  the  time  said  mill  was  running  for 
one  year  previous  to  the  fire,  not  exceeding  in  either  case  the  amf>"ant  in- 
sured. Loss  to  be  computed  from  the  day  of  the  occurrence  of  any  fire  to 
the  time  when  the  mill  could  with  ordinary  diligence  and  dispatch  be 
repaired  or  rebuilt,  and  machinery  be  replaced  therein,  and  not  to  be  lim- 
ited by  the  day  of  expiration  named  in  the  policy. 

X. 
Form  of  Proofs  of  Imu. 


■'\ 


State  of  ... . 
County  op  , . 

Be   it   known,   That  on  this day  of ,  189. .,  before 

me, ,  a  Notary  Public  duly  commissioned  and  sworn,  and  residing 

in  the  County  and   State    aforesaid,   personally    appeared     ,  who, 

being  duly  sworn,  says  that  the  following  statement  and  the  papers  therein 
referred  to  and  signed  with  his  own  hand  contain  a  particular,  just  and 
true  account  of  his  loss  in  the  words  and  figures  following,  to  wit: 

I.  That  on  the day  of ,  189 . . ,  the  Insurance 

Company  by  their  Policy  of  Insurance,  numbered ,  did  insure  the 

party  herein  and  therein  named  against  loss  or  damage  by  fire  to  the 

amount  of dollars  on  (description  of  property  insured  from  the 

policy)  for  the  term  of from  the day  of    ,  189. . ,  to 

the day  of ,  189 . . ,  at  noon. 

II.  That  in  addition  to  the  amount  covered  by  said  policy  of  said  com- 
pany, there  was  other  insurance  made  thereon  to  the  amount  of 

dollars,  as  specified  in  the  following  schedule,  besides  which  tliere  was  no 
other  insurance  thereon.  (List  of  policies  covering  any  of  the  property, 
showing  as  to  each  policy  its  date,  term,  and  amount,  the  name  of  the 
company,  and  a  copy  of  the  description  and  schedule  of  property  insured 
contained  in  such  policy.) 

m.  That    the    property    insured    belonged   to  (statement   of 

interest  of  insured  and  of  all  others  in  the  property  and  of  all  incum^ 
brances  thereon  and  changes  of  title,  etc.,  since  the  issuing  of  the  policy). 

IV.  That  the  building  insured  or  containing  the  property  destroyed  or 
damaged,  was  occupied  at  the  time  of  fire  in  its  several  parts  by  the  parties 
hereinafter  named,  and  for  the  following  purposes,  to  wit :  (List  of  ienants.) 

V.  That  the  actual  cash  value  of  the  property  so  insured  amounted  to 

the  sum  of dollars  at  the  time  immediately  preceding  the  nre,  as 

set  forth  in  the  following  schedule : 

That  on  the day  of ,  189. .,  a  fire  occurred  by  which 

the  property  insured  was  injured  or  destroyed  to  the  amount  of  ..  =  •.... 

38 


f>94  Appendix  o.  ii. 

dollars,  as  set  forth  in  the  following  scliedule  which  the  deponent  declares 
to  be  a  just,  true  and  faithful  account  of  his  loss  as  far  as  he  has  been  able 
to  ascertain  the  same : 

(Schedule  of  property  damaged  or  destroyed,  showing  the  cash  value 
of  each  item  thereof  and  the  amount  of  loss  thereon.)  And  the  insured 
claims  of  the Insurance  Company  the  sum  of dollars. 

(If  there  are  subdivisions  in  policy,  also  a  statement  of  the  amount 
claimed  under  each  subdivision.) 

VI.  That  the  fire  originated  (statement  of  knowledge  and  belief  of  the 
insured  as  to  the  time  and  origin  of  the  fire),  and  the  said  deponent 
further  declares  that  the  said  fire  did  not  originate  by  any  act,  design  or 
procurement  on  his  part,  or  in  consequence  of  any  fraud  or  evil  practice 
done  or  suffered  by  him,  and  that  nothing  has  been  done  by  or  with  his 
privity  or  consent  to  violate  the  conditions  of  insurance  or  render  void  th» 
Policy  aforesaid. 


0nsured.) 
Bworn  to  before  me  thig I 

day  of ,  188...  ( 

» 

Notary  Public. 

XL 

Form  of  Application  for  Life  Inturance. 

I  hereby  apply  for  an  assurance  of  $  ....    on  the    plan 

premiums  payable with  the Life  Insurance  Company,  on 

the  life  of ,  born  at ,  on ,18  . .,  at  present  and 

for years  resident  of      I  hereby  warrant  that  he  is  not 

intemperate  in  the  use  of  stimulants  or  narcotics.  I  agree  that  the  answer* 
given  herewith  to  the  questions  of  the  Agent  and  Examiner,  which  I  declare 
and  warrant  to  be  true,  shall  be  the  basis  of  my  contract  with  the  company, 
and  that  such  contract  shall  at  all  times  and  places  be  held  and  construed 

to  have  been  made  in  the  City  of I  also  agree  that  if  within  two 

years  from  this  date,  the  Insured  shall,  without  the  written  consent  of  the 
company,  reside  or  travel  elsewhere  than  in  or  to  the  United  States, 
Canada,  or  Europe;  or  sliall  within  such  period  and  without  such  consent, 
be  personally  engaged  in  blasting,  mining,  submarine  operations,  or  in  the 
making  of  explosives,  or  in  service  on  any  railway  train,  or  on  a  steam  or 
sailing  vessel,  or  in  naval  or  army  service  in  times  of  war ;  the  policy  hereby 
applied  for  shall  thereupon  cease  and  determine. 

Dated  at this day  of ,  189. .. 

Witness Signature 


Questions  to  be  asked  by  the  Agent,  and  answered  by  the  person  to  be 
insured  : 

1.  A  What  is  your  full  name?     b  Are  you  married! 


o.  n. 


Appendix. 


696 


3.  What  is  your  occupation  ?    (Give  kind  of  business  and  position  held.) 
8.  Are  you  in  good  health  ? 

4.  A  For  whose  benefit  is  the  proposed  insurance  f  b  How  related  to 
yout 

5.  "What  is  the  total  insurance  now  on  your  life? 

6.  In  what  companies  and  for  what  amounts? 

7.  Have  you  any  application  for  insurance  now  pending?  In  what 
companies  ? 

8.  A  Have  you  ever  applied  to  any  agent  or  sought  insurance  in  any 
company  which  either  postponed  or  refused  to  issue  a  Policy  ?  b  State 
companies  and  cause. 

9.  Are  you  engaged  in  or  connected  with  the  manufacture  or  sale  of 
Malt  or  Spirituous  Liquors? 

The  answers  to  the  following  questions  must  be  written  by  one  of  the 
Company's  Examiners : 

10.  Have  you  now  any  disease  or  disorder?     If  so,  what? 

11.  A  For  what  have  you  sought  medical  advice  during  the  past  seven 
years?     b  Dates?    c  Duration?     d  Physicians  consulted? 

12.  A  Have  you  had  any  personal  injury  or  accident  ?  b  What  ?  o  When  ? 
D  Result? 

13.  A  Have  you  had  Rheumatism?  b  Number  of  attacks?  o  Dates? 
D  Duration?     e  Severity? 

14.  A  Are  you  or  have  you  been  subject  to  Dyspepsia  ?  b  Dates  ? 
c  Duration  ?     d  Severity  ? 

15.  Have  you  ever  had  any  of  the  following  ? 


Calculus  or  gravel, 
Difficulty  in  urinating, 
Swelling  of  feet  or  face,  . 

Dropsy, 

Palpitation, 

Disease  of  heart  or  brain, 
Loss  of  consciousness, 
Habitual  or  chronic  cough. 
Consumption,      .... 

Bronchitis, 

Asthma, 

Spitting  of  blood,    .     .     . 
Bleeding  piles,     .... 

Pleurisy, 

Varicose  veins,    .     .     .     . 
Paralysis  or  palsy,   .     .     . 

Apoplexy,       

Nervous  exhaustion,     .     . 

Fits, 

Sunstroke, 


Dizziness  or  short  breath, 
Pneumonia,     . 
Diabetes,    .     .     . 
Delirium  Tremens, 
Vertigo,      .     .     . 
Insanity, 
Liver  complaint, 
Jaundice,   .     .     . 
Colic,     .... 
Dysentery,       .     . 
Diarrhoea  (chronic), 
Disease  of  spine. 
Gout,     .... 
Tumors  of  any  kind 
Swelling  of  glands, 
Ulcers  or  open  sores. 

Fistula 

Discharge  from  the  ear, 

Rupture, 

Diflttculty  in  swallowing, 


j96 


Appendix. 


o.  n. 


16.   Family  record. 


Is  your  father  living  f  . 
Is  your  mother  living  t 


How  many  brothers  living  f . 
(If  none,  so  state.) 


How  many  sisters  living  ?. . 
(If  none,  so  state.) 
Father's  father  living  ?  . . . . 
Father's  mother  living  ?  . . . 
Mother's  father  living  t. . . . 
Mother's  mother  living  ?  . . . 


Age. 


Condition  of  Eaalth. 


Is  your  father  dead  ?. , 
Is  your  mother  dead  ? 


How  many  brothers  dead  ?  • 
(If  none,  so  state.) 


flow  many  sisters  dead  t 

(If  none,  so  state.) 
Father's  father  dead  !  . . . 
Father's  mother  dead  t  . . 
Mother's  father  dead  ?. . . 
Mother's  mother  dead  !  . 


Age. 


DiBease  which  Caased 
Death. 


Dontion. 


FreTiooa 


17.  Have  any  two  members  of  the  family,  grandparents  included,  had 
consumption,  cancer,  paralysis  or  apoplexy,  disease  of  heart,  disease  ot 
kidneys  ? 

Signed  this. . .  .day  of. ,  189. .. 

{Party  to  he  insured  siffn  here) 


xn. 

A  Form  of  Policy  of  Life  Insurance. 

This  policy  witnesseth  that  tlie    Life  Insurance  Company,  in 

consideration  of  the  statements  and  agreements  in  the  application  for  this 


O.  n.  Appendix.  697 

Policy,  which  are  hereby  made  ;i  part  of  this  contract  and  of  the  sum  of 

dollars  to  it  in  hand  paid  by and  of  the  annual  premium 

of dollars  to  be  paid  at  or  before  twelve  o'clock,  m.,  on  the  .... 

day  of  ....  in  every  year  during?  the  continuance  of  this  policy,  does  insure 

the  life  of in  the  amount  of dollars,  for  the  term  of 

life,  payable  to ,  his  executors,  administrators  or  assigns,   at    its 

office  in  the  City  of  .  . . .  .,  upon  due  and  satisfactory  proof  of  interest 
and  of  the  death  of  the  said  insured,  deducting  tlierefrom  all  indebtedness 
of  the  party  to  the  company,  together  with  the  balance,  if  any,  of  the  tlien 
current  year's  premium. 

Provided,  that  in  case  the  said  premiums  shall  not  be  paid  on  or  before 
the  several  days  hereinbefore  mentioned  for  the  payment  tliereof,  at  the 

office  of  the   company   in   the  City  of ,   or  to   ugeuts  when  they 

produce  receipts  signed  by  the  President  or  Treasurer,  tlien,  and  in  every 
such  case,  this  policy  shall  cease  and  determine,  subject  to  the  provisions 
of  the  company's  non-forfeiturk  system  as  indorsed  hereon,  with  accom- 
panying table. 

This  policy  does  not  take  effect  until  the  first  premium  shall  have  been 
actually  paid;  nor  are  agents  authorized  to  make,  alter  or  discharge  this 
or  any  other  contract  in  relation  to  the  matter  of  this  insurance,  or  to 
waive  any  forfeiture  hereof,  or  to  grant  permits,  or  to  receive  for  tlie  cash 
due  for  premiums  anything  but  cash.  Any  error  made  in  understating 
the  age  of  the  insured  will  be  adjusted  by  paying  such  amount  as  the 
premiums  paid  would  purchase  at  the  table  rate. 

No  assignment  of  this  policy  shall  take  effect  until  written  notice  thereof 
shall  be  given  to  the  company. 

This  policy,  after  two  years,  will  be  incontestable,  except  for  fraud  or 
non-payment  of  premium. 

In  Witness  Whereof,  the  said     Life  Insurance  Company  has, 

by  its  President  and  Secretary,  signed  and  delivered  this  contract, 

at  the  City  of ,  this day  of ,  one  thousand  eight 

hundred  and 

,  Secretary.  ,  Pretident. 

Non-forpeitxtre  Provisions. 

When  after  two  full  annttal  premiums  shall  have  been  paid  on  this 
policy  it  shall  cease  or  become  void  solely  by  the  non-payment  of  any  pre- 
mium when  due,  its  entire  net  reserve  by  the  American  Experience  Mortality 
and  interest  at  four  per  cent,  yearly,  less  any  indebtedness  to  the  company 
on  this  policy,  shall  be  applied  by  the  company  as  a  single  premium  at  the 
company's  rates  pul>lished  and  in  force  at  this  date,  either,  first,  to  the 
purchase  of  non-participating  term  insurance  for  the  full  amount  insured 
by  this  policy,  or,  second,  upon  the  written  application  by  the  owner  of  this 

policy  and  the  surrender  thereof  to  the  company  at within  threa 

months  from  such  non-payment  of  premium,  to  the  purchase  of  a  non- 
participating  paid-up  policy  payable  at  the  time  this  policy  would  be  pay 


»98 


Appendix. 


O.  IL 


able  if  continued  in  force.  Both  kinds  of  insurance  aforesaid  will  b« 
subject  to  the  same  conditions,  except  as  to  payment  of  premiums,  as  those 
of  this  policy.  No  part,  however,  of  such  term  insurance  shall  be  due  or 
payable  unless  satisfactory  proofs  of  death  be  furnished  to  the  company 
within  one  year  after  death;  and  if  death  shall  occur  within  three  years 
after  such  non-payment  of  premium,  and  during  such  term  of  insurance, 
there  shall  be  deducted  from  the  amount  payable  the  sum  of  all  the  pre- 
miums that  would  have  become  due  on  this  policy  if  it  had  continued  in 
force. 

The  following  table  shows  the  amount  that  the  company  agrees  to  loan 
(being  one-half  of  the  reserve)  upon  a  satisfactory  assignment  of  the  policy 
as  collateral  security;  also  the  additional  time  for  which  the  insurance  will 
be  continued  in  full  force  after  lapse  by  non-payment  of  premium ;  or  the 
value  of  the  policy  in  paid-up  insurance  upon  surrender  within  three  months 
from  date  of  lapse. 

The  figures  given  are  based  upon  the  assumption  that  the  premiums 
(less  current  dividends)  have  been  fully  paid  in  cash.  If  there  be  any 
indebtedness  upon  the  policy,  the  values  as  stated  in  the  table  would  have 
to  be  reduced  proportionally  upon  the  principles  stated  in  the  policy.  The 
indebtedness,  if  any,  may  be  paid  off  in  cash,  in  which  case  the  figures  in 
the  table  will  apply : 


Company  will  Loan. 

In  Case  op  Lapse  op  Pouot. 

Number  of  Tears' 
Premloma  Paid. 

Extended  Insurance. 

Paid-op  Policy. 

Years. 

Days. 

$ 



1 

YTTT. 


A  Form  of  Policy  of  Accident  Insurance. 

The Insurance  Company,  in  consideration  of  the  warranties  in 

the  application  for  this  policy  and  of dollars,  does  hereby  insure 

under  classification (being  a  .......  by  occupation)  for 

the  term  of months  from  noon  of ,  189. .,  in  the  sum  of 

dollars  per  week  against  loss  of  time  not  exceeding con- 
secutive weeks,  resulting  from  bodily  injuries  effected  during  the  term  of 
this  insurance,  through  external,  violent,  and  accidental  means,  which 
shall,  independently  of  all  other  causes,  immediately  and  wholly  disable 
hiip  from  transacting  any  and  every  kind  of  business  pertaining  to  his  occu- 


o.  II.  Appendix.  599 

pation  above  stated.  Or  if  loss  by  severance  of  one  entire  hand  or  foot 
results  from  such  injuries  alone  within  ninety  days,  will  pay  insured  one- 
third  the  principal  sum  herein  named,  in  lieu  of  said  weekly  indemnity, 
and  on  such  payment  this  policy  sliall  cease  and  be  surrendered  to  said 
company,  or  in  event  of  loss  by  severance  of  two  entire  hands  or  feet,  or 
one  entire  hand  and  one  entire  foot,  or  loss  of  entire  sight  of  both  eyes, 
SQlely  tlirough  injuries  aforesaid  within  ninety  days,  will  pay  insured  the 
full  principal  sum  aforesaid,  provided  he  survives  said  ninety  days.  Or 
if  death  results  from  such  injuries  alone  within  ninety   days,  will  pay 

dollars  to if  surviving;  in  event  of  his  prior  death,  to 

the  legal  representatives  or  assigns  of  insured,  provided — 

1.  If  insured  is  injured  in  any  occupation  or  exposure  classed  by  this 
company  as  more  hazardous  than  that  here  given,  his  insurance  shall  be 
only  for  such  sums  as  the  premium  paid  by  him  will  purchase  at  the  rates 
fixed  for  such  increased  hazard. 

2.  This  policy  sliall  not  take  effect  unless  the  premium  is  paid  previous 
to  any  accident  under  which  claim  is  made ;  and  the  company  may  cancel 
It  at  any  time  by  refunding  said  premium,  less  a  pro  rata  share  for  the  time 
it  has  been  in  force. 

3.  The  company's  total  liability  hereon  in  any  policy  year  shall  not 
exceed  the  principal  sura  hereby  insured ;  therefore,  in  case  of  claim  for 
full  principal  sum,  any  sums  paid  as  indemnity  within  such  policy  year 
shall  be  deducted  therefrom. 

4.  Immediate  written  notice,  with  full  particulars  and  full  name  and 

address  of  insured,  is  to  be  given  said  company  at of  any  accident 

and  injury  for  which  claim  is  made.  Unless  affirmative  proof  of  death, 
loss  of  liinb  or  sight,  or  duration  of  disability,  and  of  their  being  the 
proximate  result  of  external,  violent  and  accidental  means,  is  so  furnished 
within  seven  months  from  time  of  such  accident,  all  claims  based  thereon 
fehall  be  forfeited  to  the  company.  No  legal  proceedings  for  recovery 
hereunder  shall  be  brought  within  three  months  after  receipt  of  proof  at 
this  office,  nor  at  all,  unless  begun  within  one  year  from  date  of  alleged 
accident. 

5.  This  insurance  does  not  cover  disappearances;  nor  suicide,  sane  or 
insane;  nor  injuries  of  which  there  is  no  visible  mark  on  the  body  (the 
body  itself  in  case  of  death  not  being  deemed  such  mark) ;  nor  accident, 
nor  death,  nor  loss  of  limb  or  sight,  nor  disability,  resulting  wholly  or 
partly,  directly  or  indirectly  from  any  of  the  following  causes,  or  while  so 
engaged  or  affected:  Disease  or  bodily  infirmity,  hernia,  fits,  vertigo, 
sleep-walking;  medical  or  surgical  treatment,  except  amputations  necessi- 
tated solely  by  injuries  and  made  within  ninety  days  after  accident;  in- 
toxication or  narcotics ;  voluntary  or  involuntary  taking  of  poison  or  con- 
tact with  poisonous  substances  or  inhaling  of  any  gas  or  vapor;  sunstroke 
or  freezing;  dueling  or  fighting,  war  or  riot;  intentional  injuries  (inflicted 
by  the  insured  or  any  other  person);  voluntary  over-exertion;  violating 
law ;  violating  rules  of  a  corporation ;  voluntary  exposure  to  unnecessary 
danger ;  expeditions  into  wild  or  uncivilized  countries ;  entering  or  trying 


OOO  Appendix.  o.  il 

to  enter  or  leave  a  moving  conveyance  using  steam  as  a  motive  power 
(except  cable  cars),  riding  in  or  on  any  sucli  conveyance  not  provided  for 
transportation  of  passengers,  walking  or  being  on  a  railway  bridge  or  road- 
bed (railway  employees  excepted). 

6.  No  claim  sliall  be  valid  in  excess  of  $10,000  with  $50  weekly  in- 
demnity under  accident  policies,  nor  for  indemnity  in  excess  of  money 
value  of  insured's  time.  All  premiums  paid  for  such  excess  shall  be  re- 
turned, on  demand,  to  insured  or  his  legal  representative. 

7.  Any  medical  adviser  of  th3  company  shall  be  allowed,  as  often  as 
he  requires,  to  examine  the  person  or  body  ot  insured  in  respect  to  alleged 
injury  or  cause  of  death. 

8.  Any  claim  hereunder  shall  be  subject  to  proof  of  interest.  A  copy 
of  any  assignment  shall  be  given  within  tliirty  days  to  the  company,  which 
shall  not  be  responsible  for  its  validity.  The  company  may  cancel  this 
policy  at  any  time  by  refunding  the  unearned  premium  thereon.  No  agent 
has  power  to  waive  any  condition  of  this  policy. 

In  witness  whereof,  etc. 

xrv. 

A  F<yrm  of  Policy  of  Marine  Insurance  Cargo. 

By  the Insurance  Company on  account  of 

In  case  of  loss,  to  be  paid  in  funds  current  in  the  United  States,  or  in 

the  City  of  New  York,  to ,  do  make  insurance,  and  cause 

to  be  insured,  lost  or  not  lost,  at  and  from  .  .    upon laden  or 

to  be  laden  on  board  the  good ,  whereof is  master  for  this 

present  voyage    ,  or  whoever  else  shall  go  for  master  in  said  vessel, 

or  by  whatever  other  name  or  names  the  said  vessel,  or  the  master  thereof, 
is  or  shall  be  named  or  called. 

Beginning  the  adventure  upon  the  said  goods  and  merchandises,  from 
and  immediately  following  the  loading  thereof  on  board  of  the  said  vessel, 

at as  aforesaid,  and  so  shall  continue  and  endure  until  the  said 

goods  and   merchandises  shall  be  safely  landed  at as  aforesaid. 

And  it  shall  and  may  be  lawful  for  the  said  vessel,  in  her  voyage,  to  pro- 
ceed and  sail  to,  touch  and  stay  at,  any  ports  or  places,  if  thereunto  obliged 
by  stress  of  weather,  or  other  unavoidable  accident,  without  prejudice  to 
this  insurance.  The  said  goods  and  merchandises,  hereby  insured,  are 
valued  (premium  included)  at dollars. 

Touching  the  adventures  and  perils  which  the  said Insurance 

Company  is  contented  to  bear,  and  takes  upcm  itself  in  this  voyage,  they 
are  of  the  seas,  men-of-icar,  fires,  enemies,  pirates,  rovers,  thieves,  jettisons, 
letters  of  mart  and  countermart,  reprisals,  takings  at  sea,  arrests,  restraints  and 
detainments  of  all  Icings,  princes  or  people,  of  what  nation,  condition  or  quality 
$oever,  barratry  of  the  mader  and  mariners,  and  all  other  perils,  losses  and 
misfortunes  that  have  or  shall  come  to  the  hurt,  detriment  or  dnniage  of 
the  said  goods  and  merchandises,  or  any  [jart  thereof.     And  in  case  of  any 


0.  II.  Appendix.  601 

loss  or  misfortune,  it  shall  be  lawful  and  necessary  to  and  for  the  assured, 
his  factors,  servants  and  assigns,  to  sue,  labor,  and  travel  for,  in  and  about 
the  defense,  safeguard  and  recovery  of  the  said  goods  and  merchandises, 
or  any  part  thereof,  without  prejudice  to  this  insurance;  nor  shall  the 
acts  of  the  insured  or  insurers,  in  recovering,  saving  and  preserving  the 
property  insured,  in  case  of  disaster,  be  considered  a  waiver  or  an  accept- 
ance of  an  abandonment ;  to  the  charges  whereof  the  said  Insurance 
Company  will  contribute  according  to  the  rate  and  quantity  of  the  sum 
herein  insured ;  liaving  been  paid  the  consideration  for  this  insurance,  by 

the  assured,  or  his  assigns,  at  and  after  the  rate  of per  cent. 

And  in  case  of  loss,  such  loss  to  be  paid  in  thirty  days  after  proof  of 

loss,  and  proof  of  interest  in  the  said (the  amount  of  the  note 

given  for  the  premium,  if  unpaid,  being  first  deducted),  but  no  partial 
loss  or  particular  average  shall  in  any  case  be  paid,  unless  amounting  to 
J^e  per  cent.  Provided  always,  and  it  is  hereby  further  agreed,  That  if  the 
said  assured  shall  have  made  any  other  assurance  upon  the  premises  afore- 
said, prior  in  day  of  date  to  this  policy,  then  the  said Insurance 

Company  shall  be  answerable  only  for  so  much  as  the  amount  of  such  prior 
assurance  may  be  deficient  towards  fully  covering  the  premises  hereby 

assured ;  and  the  said Insurance  Company  shall  return  premium 

upon  so  much  of  the  sum  by  them  assured,  as  they  shall  be  by  such  prior 
assurance  exonerated  from.  And  in  case  of  any  assurance  upon  the  said 
premises,  subsequent  in  day  of  date  to  this  policy,  the  said Insur- 
ance Company  shall  nevertheless  be  answerable  for  the  full  extent  of  the 
sum  by  them  subscribed  hereto,  without  right  to  claim  contribution  from 
.'jch  subsequent  assurers,  and  shall  accordingly  be  entitled  to  retain  the 
premium  by  them  received,  in  the  same  manner  as  if  no  such  subsequent 
assurauce  had  been  made.  Other  assurance  upon  the  premises  aforesaid, 
of  date  ii)e  same  day  as  this  policy,  shall  be  deemed  simultaneous  here- 
with ;  and  the  said Insurance  Company  shall  not  be  liable  for 

more  than  a  ratable  contribution  in  the  proportion  of  the  sum  by  thero 
insured  to  the  aggregate  of  such  simultaneous  assurance.  It  is  also 
AGKEED,  that  the  property  be  warranted  by  the  assured  free  from  any 
charge,  damage  or  loss,  which  may  arise  in  consequence  of  a  seizure  or 
detention,  for  or  on  account  of  any  illicit  or  prohibited  trade  or  any  trade 
in  articles  contraband  of  war. 

Warranted  not  to  abandon  in  case  of  capture,  seizure,  or  detention, 
until  after  condemnation  of  the  property  insured  ;  nor  until  ninety  days  after 
notice  of  said  condemnation  is  given  to  tliis  company.  Also  warranted  not 
to  abandon  in  case  of  blockade,  and  free  from  any  expense  in  consequence 
of  capture,  seizure,  detention  or  blockade,  but  in  the  event  of  blockade, 
to  be  at  liberty  to  proceed  to  an  open  port  and  there  end  the  voyage. 

In  Witness  Whereof,  the  President  or  Vice-President  of   the  said 

Insurance  Company  hath  hereunto  subscribed  his  name, 

and  the  sum  insured,  an.,  caused  the  same  to  be  attested  by  their 
Secretary,  in ,  the day  of ,  189. .. 


d02  Appendix.  o.  n. 

Mkmoranditm.  It  19  also  agreed,  that  bar,  bundle,  rod,  hoop  and  sheet 
iron,  wire  of  all  kinds,  tin  plates,  steel,  madder,  sumac,  wicker-ware  and 
willow  (manufactured  or  otherwise),  salt,  grain  of  all  kinds,  tobacco, 
Indian  meal,  fruits  (whether  preserved  or  otherwise),  cheese,  dry  fish,  hay, 
vegetables  and  roots,  rags,  hempen  yarn,  bags,  cotton  bagging,  and  other  ar- 
ticles used  for  bags  or  bagging,  pleasure  carriages,  household  furniture,  skins 
and  hides,  musical  instruments,  looking-glasses,  and  all  other  articles  that 
are  perishable  in  their  own  nature,  are  warranted  by  the  assured  free  from 
average,  unless  general ;  hemp,  tobacco  stems,  matting  and  cassia,  except 
in  boxes,  free  from  average  under  twentij  per  cent,  vmless  general;  and 
sugar,  flax,  flax-seed  and  bread,  are  warranted  by  the  assured  free  from 
average  under  seven  per  cent,  unless  general ;  and  coffee,  in  bags  or  bulk, 
pepper  in  bags  or  bulk,  and  rice,  free  from  average  under  ten  per  cent,  unless 
general. 

Warranted  by  the  insured  free  from  damage  or  injury,  from  dampness, 
change  of  flavor,  or  being  spotted,  discolored,  mustv  or  mouldy,  except 
caused  by  actual  contact  of  sea  water  with  the  articles  damaged,  occasioned 
by  sea  perils.  In  case  of  partial  loss  by  sea  damage  to  dry  goods,  cutlery  or 
other  hardware,  the  loss  shall  be  ascertained  by  a  separation  and  sale  of 
the  portion  only  of  the  contents  of  the  packages  so  damaged  and  not  oth- 
erwise, and  the  same  practice  shall  obtain  as  to  all  other  merchandise  as 
far  as  practicable.  Not  liable  for  leakage  on  molasses  or  other  liquids, 
unless  occasioned  by  stranding  or  collision  with  another  vessel. 

If  the  voyage  aforesaid  shall  have  been  begun  and  shall  have  termi- 
nated before  the  date  of  this  policy,  then  there  shall  be  no  return  of  pre- 
mium on  account  of  such  termination  of  the  voyage. 

In  all  cases  of  return  of  premium,  in  whole  or  in  part,  one-half  per 
cent,  upon  the  sum  insured  is  to  be  retained  by  the  assurers. 

% ,  dollars. 

,  Secretary.  ,  President. 

XV. 
A  Form  of  Collision  Clause. 

And  it  is  further  agreed,  that  if  the  vessel  hereby  insured  shall  come 
in  collision  with  another  vessel,  and  the  assured  become  liable  to  pay,  and 
shall  pay,  any  sum  or  sums  for  damages  resulting  therefrom  to  said  other 
vessel,  her  freight  or  her  cargo,  in  such  case  this  company  will  contribute 
towards  the  payment  of  three-fourths  part  of  the  total  amount  of  said 
damages,  in  the  proportion  that  the  sum  insured  under  this  policy  bears 
to  the  total  valuation  of  the  vessel  as  stated  herein,  provided,  that  this 
company  shall  not  in  any  event  be  held  liable  under  this  agreement  for  a 
greater  sum  than  three-fourths  part  of  the  amount  insured  under  this 
policy. 

And  it  is  also  agreed  that  this  insurance  company  will  bear  a  like  proper- 


0.  n.  Appendix.  80ft 

tionato  share  of  any  costs  and  expenses  that  raaj  be  incurred  in  contesting 
the  liability  resulting  I'rum  said  collision,  provided,  the  written  consent 
of  the  company  to  such  contest  be  first  obtained. 

But  under  no  circumstances  shall  this  company  be  held  liable  for  any 
ccntribution  in  respect  of  any  sum  that  the  insured  may  be  held  liable  to 
pay  by  reason  of  loss  of  life  or  personal  injury  to  individuals  from  any 
cause  whatsoever,  nor  for  any  claim  for  demurrage  or  loss  of  the  use  oi 
any  vessel,  nor  for  wages  or  provisions  or  expenses  of  master,  ofS^cers  or 
crews. 

It  is  further  agreed  to,  that  in  no  event  shall  this  insurance  company 
be  liable  under  this  policy  for  more  than  the  sum  insured  in  any  case, 
either  for  claims  for  loss  and  damage  ^^^  charges  to  hull  of  the  vessel  * 
hereby  insured  ^^f  for  claims  of  any  and  all  kinds  arising  under  this  col- 
lision clause,  or  the  policy  to  which  it  is  attached,  and  all  payments  mad« 
under  this  policy  shall  reduce  this  policy  by  the  amounts  so  paid,  unless 
restored  by  a  new  premium. 

XVI. 

Examples  of  Adjustments. 

1.  (The  policy  containing  a  three-fourths  loss  clause.) 

Insurance.  Sound  Value.  Loss. 

$7,000  $8,000  $6,000 

Insurer  pays  three  fourths  of  $6,000=$4,600. 

8.  (One  of  the  policies  containing  a  two-thirds  value  clause.) 

Insurance.  Sound  Value.  Loss. 

Poll?  B:   •.•.-.■  IS  I  t'^-OOO  »9.'»o 

Policy  A  contains  a  clause  limiting  liability  to  two-thirds  of  the  value 
of  the  property.  Policy  B  contains  no  such  special  clause.  Policy  B  is 
obligated  to  pay  the  difference  (i.  e.,  $1,000,)  between  the  loss  and  two- 
thirds  of  the  value  of  the  property.  (See  p.  185,  sub.  1.)  To  the  bal- 
ance of  the  loss,  namely,  $8,000,  the  two  policies  contribute  pro  rata, 
policy  A  according  to  its  face  value  and  policy  B  according  to  its  face  less 
(he  $1,000. 

A  pays  ^^???- of  $8,000  =  $4,363.64 

^     -'  IIOOO 

B  pays  $1,000  -f  ^^  of  $8,000  =    4,636.36 

^     •'  IIOOO 


Total,       .  $9,000.00 

8.  (The  policies  being  non-concurrent.) 

The  stock  of  merchandise  in  a  country  store  is  insured  under  three  pol- 
icies, as  follows : 

A.  (blanket)  On  general  stock,    ....      $15,000 

B.  (blanket)  On  dry  goods  and  groceries,       .         .       6,000 

C.  On  crockery 1,000 

Total,        ...  .        .  $21,000 


604  Appendix.  O.  n 

The  stock  and  loss  a?"e  as  follows  : 

Sound  Value.  Loss. 

Dry  goods, $12,00U  $7,000 

Groceries,         .         •         .         .         .        8,000  3,500 

Crockery,     ....                     4,000  2,800 

Totals,       ....             $24,000  $13,300 

If,  as  seems  equitable,  a  blanket  policy  should  be  call(  d  upon  to  con 
tribute  in  the  ratios  which  the  values  of  the  several  classes  of  stock  cov- 
ered by  it  bear  I'espectively  to  the  whole  value  of  the  stock  covered  by 
It,  wo  obtain  in  this  case  the  following  distribution  of  the  insurance : 
On  dry  goods.          (3n  groceries.  On  crockery. 

A  (15,000)  H  ==$7,500               ii  ~  $5,000  3*4  =$2,600 

B  (5,000)  ]§=    3,000              a^=    2,000 
C     .  1,000 

Totals,        $10,500  $7,000  $3,600 

The  loss  accordingly  is  apportioned  among  the  policies  as  follows : 
Dry  goods.  Groceries.  Crov^ccry. 

A,  tVV  of  7,000  ^  of  3,600  §t  of  2,800 

B,  T^  of  7,000  ?  of  8,600 

C \%ot  3,800 

Ihe  policies  paying. 

Dry  goods.       Groceries.        Crockery.         Totals. 

A,  .      .      $6,000  $2,500  $2,000  $9,600 

B,  2,000  1,000  8,000 

C,  800  800 

Totals,  $7,000  $3,500  $2,800  $13,800 

A  somewhat  different  case  is  presented  where  the  loss  on  one  class  of 
■took  exceeds  the  amount  of  insurance  assigned  to  it  in  pursuance  of  the 
method  of  distributing  insurance  which  was  employed  in  the  preceding 
oaAe.     Thus,  suppose  the  loss  to  be  as  follows : 

On  dry  goods $11,900 

On  groceries, 8,600 

On  crockery 2,800 

Total .         .    $18,200 

the  sound  value  and  insurance  remaining  as  above. 

The  two  blanket  policies,  under  the  same  rule  of  distribution,  are  called 
upon  to  pay  the  loss  on  dry  goods  up  to  the  amount  of  $10,500,  leaving  a 
deficit  of  $1,400  on  dry  goods;  and  are  further  called  upon  to  pay  on 
groceries  and  crockery  together  the  amount  of  $5,500,  leaving  a  balance 
of  $4.00C  ($20,000— $16,000)  of  blanket  insurance  unexhausted.  That 
the  insured  may  be  fully  indemnified  and  "  not  suffer  by  non-concurrence 
of  policies"  (see  p.  186),  it  is  necessary  that  this  deficit  should  be  dis- 
tributed between  the  two  blanket  policies,  and  an  equitable  way  of  doing 


O.  IL  Appendix.  606 

this  seems  to  be  in  accordance  with  the  ratios  already  n«ed  In  appcrtion* 
Ing  the  loss.     Thus,  of  the  deficit,  policy  A  pays  f  or  $1,000;  policy  fl 
pays  ?  or  f  400 ;  and  the  total  payments  under  each  policy  are  as  follows : 
Dry  goods.        Groceries.        Crockery.  Totals. 

A,  .      .     $8,600  $2,600  $2,000  $13,000 

B,  8,400  1,000  4,400 

C,  800  800 

Totals,  $11,900  $3,600  $S,800  $18,SO0 


INDEX. 

[The  references  are  to  pagM.] 


A 

ABAiroONMENT, 

what  it  is,  and  what  jxistifles,  113,  114,  IIS. 

must  be  entire  and  absolute,  110. 

notice  of,  115,  116. 

ought  to  be  in  writing,  116. 

time  for  giving  notice  of,  116. 

notice  of,  when  necessary  and  onnecessary,  11^  IIS,  114 

effect  of,  116,  117,  118. 

acceptance  or  refusal  of,  117,  118. 

If  accepted  Is  irrevocable,  117. 

agents  of  insured  become  agents  of  Insnrer  after,  111. 

origin  of  the  doctrine  of,  284,  286. 

not  allowed  under  fire  policy,  584 

See  CoNSTRUCTiVK  ToTAii  Lon. 
A.CCIDENT, 

definition  of  accidental  injury,  213. 

instances  of,  213-216. 

whether  an  accident  or  a  disease,  216. 

Bacon  v.  U.  S.  Mut.  Ace.  Asso.,  514. 

injury  by  external,  violent  and  accidental  meaiu,  214,  621. 

by  outward  and  visible  means,  507. 

Mallory  ».  Travelers'  Ins.  Co.,  504. 

from  hazardous  employment,  215. 

without  visible  mark  on  the  body,  210. 

by  poison,  gas,  etc.,  216. 

from  violation  of  law,  209,  217. 

Murray  v.  New  York  Life  Ins.  Ca,  60S. 

from  negligence,  217,  218,  526,  528. 

Tuttle  V.  Travelers'  Ins  Co.,  526. 

while  traveling,  218. 

Northnip  v.  Railway  Pass.  Assur.  Co.,  68S. 

accident  policy,  form  of,  698. 

clauses  of  the  accident  policy  considered,  218-S1& 

illustrative  leading  cases,  514-534. 

See  Loss;  WABBAmrr. 
ACCOUNTING, 

policy-holder  has  no  right  to  demand,  46i. 
ACCOUNTS, 

not  covered  by  fire  policy,  168. 

(607) 


808  Indkx. 

[Th«  references  are  to  pages.] 

ACT  OF  GOD, 

inability  to  comply  with  conditions  no  excuse,  04,  dft. 
ACTION, 

See  Uemrdies. 
ACTUAL  TOTAL  LOSS, 

See  Total  Loss. 
ACTUARIES, 

business  of,  17. 
ACTUARIES  OR  COJVJ  i  INED  EXPERIENCE  TABLE,  IT 
ADJUSTMENT, 

taking  part  in,  when  a  waiver,  84. 

course  of  business  upon,  263. 

effect  of,  203. 

of  general  average,  126,  127. 

of  particular  average,  248,  249,  250. 

between  contributing  companies,  184,  186,  ISO,  264 

foreign  adjustments,  263. 

examples  of  adjustments,  603,  604. 

See  Loss. 
ADMINISTRATOR, 

has  insurable  interest,  35. 
AGE, 

representations  as  to,  202,  211. 
AGENT, 

Hartford  companies  conspicuous  in  extending  the  agency  fystem,  IS, 

authority  of,  to  bind  the  companies,  20-26. 

phraseology  current  in  the  trade  not  controlling,  21. 

actual  scope  of  business  more  significant  than  recital  or  Btipulation  la 
the  policy,  21. 

president  and  secretary  have  wide  discretion,  21. 
1.  Lira  Insurance.    AurnoRiTT  in  Fact  of  Agkitts. 

general  agents  so-called  have  power  to  make  contracts  with  sab-Agents, 
22. 

so  far  as  controlling  terms  of  life  policy  is  concerned  they  are  epecis] 
agents,  22. 

course  of  their  business  in  procuring  applications,  22,  23. 

authority  of  local  medical  examiners,  22. 

agent  sometimes  gives  binding  receipt,  22. 

sometimes  is  allowed  to  give  credit  for  premium,  23. 

soliciting  sub-agents  have  narrower  territory,  23. 

general  and  sub-agents  usually  no  authority  to  make  or  alter  policies 
except  sometimes  as  to  premiums,  23. 

but  may  estop  company,  23. 
S.  FiRK  Insurance.    Authority  in  Fact  of  AoEirrs. 

general  managers  have  wide  discretion  like  officers,  24. 

commissioned  agents,  course  of  business  and  authority  of,  24,  25. 

are  general  agents  to  make  and  alter  policies,  except  as  policy  limits 
authority,  25. 

sometimes  allowed  to  settle  losses,  25. 

deduct  their  commissions  from  premiums  collected,  2(L 

agents  for  soliciting  only,  authority  of,  26. 


Index.  609 

[The  references  are  to  pages.] 
LQEST— continued 
8.  Marine  Insurance.     A0thority  in  Fact  of  AeKim. 

agents  outside  home  office,  26. 

company  often  gives  credit  to  broker  for  premiums  and  brokw  to  In- 
sured, 26. 
Ik  General. 

concealments  by  agents,  when  principal  held  and  not  held,  67. 

Proudfoot  V.  Montefiore,  324.     Blackburn  v.  Vigors,  330. 

general  principles  of  law  relating  to  agency,  86,  87. 

no  reason  why  a  specially  stringent  rule  should  be  applied  against  in- 
surers, 87. 

company  bound  by  acts  within  ostensible  authority,  87. 

undisclosed  instructions  not  binding  upon  insured,  88. 

principal  liable  for  agent's  tort,  88. 

agency  a  question  of  law  upon  tlie  facts  of  each  case,  88. 

effect  of  contract  stipulations  as  to  who  are  agents,  89. 

such  stipulations  are  at  least  prima  facie  binding,  89. 

why  they  are  not  always  conclusive,  80-92. 

Eausal  v.  Minnesota  Farmers'  Mut.  Fire  Ins.  Asso.,  892. 

the  sound  rule  in  such  a  case.  91. 

statutes  providing  that  soliciting  agents  are  agents  of  company,  92, 
669,  570. 

effect  of  contract  stipulations  as  to  the  manner  of  waiving,  92. 

Messelbach  v.  Norman,  397. 

contract  method,  viz.,  by  writing  held  exclusive  In  Mass.,  03. 

held  otherwise  in  New  York  and  elsewhere,  94. 

New  York  rule  more  in  harmony  with  general  doctrine  of  waivers,  M. 

Knickerbocker  Life  Ins.  Co.  v.  Norton,  399, 

authority  of  officerr  to  make  and  alter  contracts,  94. 

authority  in  law  of  general  managers,  95. 

the  company  held  liable  for  the  agent's  Interpretation  of  his  instmo- 
tions,  317. 
L  Lite  Insubancb. 

ordinary  canvassing  agents  no  authority  to  make  or  alter  contracts,  9S. 

exception  sometimes  as  to  first  premium,  95. 

Critchett  v.  American  1ns.  Co.,  495. 

no  Implied  authority  to  accept  anything  but  money,  96. 

U  there  is  collusion  between  company's  agent  and  the  insured  there  Is 
no  estoppel,  96,  412. 

If  mistakes  in  application  are  solely  the  act  of  the  agent,  company  is 
estopped,  96. 

Union  Mut.  Ins.  Co.  v.  Wilkinson,  364. 

negligence  for  the  insured  not  to  read  application,  97< 

Ryan  r.  World  Mutual  Life  Ins.  Co.,  408. 

courts  have  divided  on  tliis  last  point,  97. 

interpretation  by  agent  of  questions  and  answers  in  application  ought 
not  to  bind  company,  97,  98. 

knowledge  by  agent  of  facts  constituting  forfeiture  when  constitutes 
estoppel,  99,  100. 

Van  Schoick  o.  Niagara  Fire  Ins.  Co.,  362. 

policy  stipulations  as  to  authority  of  canvassing  life  agents,  100. 
39 


610  Index. 

[The  references  are  to  pages.] 

kGVST— continued. 
%.  FiRK  Insurance. 
ordinary  commissioned  agents,  power  to  waive,  101. 
■peciai  soliciting  agents  and  clerics,  power  of,  102. 
agent  to  adjust,no  authority  to  waive  conditions  or  forfeitures,  102. 
effect  of  stipulation  in  standard  policy  as  to  who  are  agents,  171,  172. 
Eausal  v.  Minnesota  Farmers  Mut.  Fire  Ins.  Asso.,  392. 
agent  to  procure  insurance  no  implied  authority  to  cancel,  174. 
effect  of  stipulation  in  standard  policy  limiting  waivers  to  writing,  194, 

196. 
Walsh  ».  Hartford  Fire  Ins.  Co.,  480. 

See  Waivkb  and  Estoppsl. 
kLIENATION, 

insurance  contract  is  personal  and  does  not  pass  with  the  title  of  the 

property,  42. 
Bayner  ».  Preston,  276. 

whether  temporary  suspension  of  interest  avoids,  80. 
sale  or  alienation  of  entire  interest  in  subject  of  insurance  avoids  the 

fire  policy,  166. 
different  forms  of  alienation  clause,  156. 
under  some  policies  sale  or  change  of  title  or  possession  in  whole  or 

part  avoids,  166. 
giving  real  estate  mortgage  is  not  sale  or  change  of  title,  157,  168. 
effect  of  chattel  mortgage,  157. 
placing  or  incurring  other  liens,  157. 

contract  to  sell  is  not  sale  or  change  of  title,  or  of  interest,  167. 
sale  in  foreclosure  does  not  avoid  until  delivery  of  deed,  167. 
assignment  in  bankruptcy  or  insolvency  is  a  change  of  interest,  167. 
deed  given  as  collateral  is  not  a  change  of  interest,  167. 
death  of  insured  or  devise  by  will  amounts  to  a  change  of  interest,  167. 
alienation  clause  of  New  York  standard  policy  considered,  158-161. 
giving  real  estate  mortgage  does  not  violate,  168. 
sale  and  mortgage  back  avoids,  168. 

clause  does  not  apply  to  sale  of  fluctuating  stock  of  goods  in  store,  168. 
but  policy  attaches  only  to  goods  in  store  at  time  of  loss,  150. 
transfer  or  shifting  of  interest  among  joint  owners,  160. 
among  those  jointly  insured,  159. 
whether  transfers  among  joint  tenants  are  proliibited  by  New  York 

standard  policy,  160. 
Walton  V.  Agricultural  Ins.  Co.,  462. 
introduction  of  new  interest  or  person  aToids,  160. 
partition  of  insured  property  avoids,  160. 

after  termination  of  the  risk  by  loss  sale  does  not  avoid,  160,  161. 
possession  under  alienation  clause  means  right  of  possession,  161. 
construction  of  this  clause  for  court,  161. 
alienation  clause  in  Massachusetts  standard  policy,  161. 
4X.L  OTHER  PERILS, 

Interpretation  of  the  clause,  240,  241. 
what  casualties  included  in,  235,  241. 
Thames,  etc   Ins.  Co.  v.  Hamilton,  648. 


Index.  611 

[The  references  are  to  pages.] 

iLLTERATION, 

material  alterations  pending  negotiations,   if  known,  mnil   oe  dls 

closed,  61. 
implied  agreement  that  insured  will  not  materially  change  the  charac- 
ter of  the  risk,  8,  150. 
new  buildings  or  change  of  structure,  151,  162. 
in  the  use  of  the  property,  160,  151,  152. 
Introduction  of  new  machinery,  161. 
ordinary  repairs,  151. 

question  of  material  alteration  for  jury,  151. 
Williams  v.  Peoples  Fire  Ins.  Co.,  452. 
whether  cliattel  mortgage  amounts  to  increase  of  risk,  151. 
voluntary  and  involuntary  liens  generally  are  not,  because  there  are 

special  provisions  in  regard  to  liens,  151. 
chattel  mortgage  without  consent,  prohibited  by  New  York  standard 

policy,  154,  165. 
change  in  surroundings,  150,  152. 
alterations  by  tenant,  152. 

whether  temporary  increase  of  risk  avoids  or  suspends  policy,  162. 
clause  in  New  York  standard  policy  against  increase  of  hazard,  150, 686. 
forbidden  increase  of  hazard  avoids  though  not  connected  with  th« 

loss,  152. 
a  statement  of  present  use  not  a  warranty  of  continuance,  66,  60. 
special  provision  In  regard  to  mechanics,  152,  153. 
clause  in  Massachusetts  policy,  162. 
AMERICAN  EXPERIENCE  TABLE,  17. 
ANCHORS, 

loss  of,  120,  131. 

cost  of  replacing,  allowed  without  deduction,  120. 
In  general  average,  181, 

usually  not  wear  and  tear  but  covered  by  policy,  246. 
unless  from  original  defect,  246. 
APPLICATION, 
what  it  is,  16,  22. 

course  of  business  in  obtaining  its  execution,  22. 
written  applications  not  so  frequently  used  in  fire  as  in  life  liirav» 

ance,  16. 
note  of  inquiry  sometimes  serves  for  application  In  marine  Intar- 

ance,  26. 
form  of  application,  life,  694-696. 
generally  made  a  part  of  the  contract,  66,  169,  199l 
and  its  statements,  If  relevant,  become  warranties,  66,  160, 100. 
Cushman  v.  U.  S.  Life  Ins.  Co.,  486. 
may  modify  the  conditions  of  policy  itself,  169. 
If  only  referred  to  and  not  expressly  made  a  part  of  the  contract  ill 

statements  are  only  representations,  169. 
Phoenix  Life  Ins.  Co.  r.  Raddln,  318. 
knowledge  of  agent  of  errors  in,  82,  98^.100. 
Van  Schoick  v.  Niagara  Fire  Ins.  Co.,  362. 

mistakes  In,  when  solely  the  act  of  the  company's  agent,  28,  26, 70,  Oft 
Union  Mnt.  Ins.  Co.  v.  Wilkinson,  364. 


812  Index. 

[The  references  are  to  page*.] 

APPLICATION— continued. 

notice  or  stipulation  in,  limiting  agents'  authority,  77,  06,  98,  100. 
•tatutes  requiring  annexation  of,  to  policy,  570. 
statutes  requiring  provisions  of,  to  be  set  forth  in  policy,  670 
APPORTIONMENT, 

If  risk  attaches,  the  premium  is  not  apportionable,  42. 

If  risk  fails  to  attach  to  the  property  or  to  any  severable  part  thereof 

premium  thereon  is  returnable,  42. 
Tyrie  v.  Fletcher,  265. 

in  valued  policy  if  part  only  of  subject  Is  exposed  the  valuation  It  l^ 
portioned,  118. 

See  Contribution. 
APPRAISAL. 

See  Arbitration. 
ARBITRATION, 

reference  to  arbitration  of  all  matters  in  dispute  or  general  question  of 

liability  is  void,  182. 
itrlct  construction  has  been  applied  to  arbitration  or  appraisal  clania, 

182. 
arbitration  clause  in  New  York  standard  policy  is  valid  and  condition 

precedent,  182. 
but  otherwise  in  Vermont  by  statute,  182. 
provision  perhaps  is  only  applicable  to  property  partially  deatroyed) 

182. 
If  arbitrators  go  outside  submission,  appraisal  is  Invalid,  182. 
If  two  appraisers  agree  they  need  not  call  in  umpire,  182. 
appraisal  clause  not  applicable  to  a  contract  of  re-insurance,  188. 
clause  in  New  York  standard  form,  587. 
clause  in  Massachusetts  standard  form,  182. 
ARREST, 

definition  of  the  term,  237. 
distinguished  from  capture,  237. 
when  not  covered  by  the  policy,  237,  238. 
ARRIVAL, 
what  is,  227. 

See  Risk  ;  Oood  Safety. 
ARSON, 

by  insured,  avoids  policy,  138. 
by  wife  or  agent  does  not  avoid,  136. 
by  officer  of  insured  corporation,  136. 
ASSESSMENT, 

company  bound  to  lay  assessment  for  losses,  4. 

in  mutual  companies  premiums  often  paid  by  assessraents,  208. 

notice  of  time  and  place  of,  206. 

If  notice  is  not  received,  no  forfeiture,  206. 

unless  policy  provides  that  sending  notice  is  sufficient,  206. 
See  Premium. 
ASSIGNMENT, 

assignee  of  life  policy,  need  not  have  insurable  interest,  8& 
policy  not  an  incident  of  property  insured,  42. 
mu«^  be  assigned  to  follow  it,  42. 


Index.  618 

[The  references  are  to  pages.] 

ASSIGNMENT— confjnued. 

mariue  and  life  policies  assignable,  42,  43. 

Are  policy  not  assignable  without  consent,  42 

rested  interest  of  beneficiary  cannot  be  disturbed  by  aesignnient,  48. 

assignment  clause  in  New  York  standard  policy,  161,  686. 

pledge  or  deposit  of  policy  is  not  assignment,  162. 

assiguee  of  fire  policy,  unless  the  subject  of  insurance  is  also  trans- 
ferred, Is  mere'.y  a  designated  payee  having  equitable  lien  upon  pro- 
ceeds, 162. 

assignment  of  policy  with  consent  of  company  constitutes  new  con- 
tract, 162. 

company  alone  can  object  to  lack  of  company's  consent,  162. 

after  loss  the  interest  of  the  insured  may  be  assigned  without  consenti 
162. 

provision  of  Massachusetts  standard  policy,  163. 

policy  In  favor  of  wife  and  children,  whether  assignable,  48. 
See  Alienation. 
ASSURANCE, 

ASSUBED, 


See  INSUBANOK. 

See  INSUBSD. 


•  AT  AND  FROM," 

meaning  of  the  words,  221,  222. 

what  satisfies,  222. 

on  an  outward  voyage,  222. 

on  a  homeward  voyage,  222. 

an  island,  222. 
AYERAGB, 

definition  of,  266. 

word  Is  loosely  employed,  260. 

general, 


particular, 
Ctm  from, 
elansei, 


See  Okitkbai.  AvKBAea. 

See  Pabtiouulb  Atkbaob. 

See  Fbeb  fbom  Atbbasb. 


See  AvEBAeK  CzjLvnKt. 
AVERAGE  ADJUSTERS,  263. 
AVERAGE  CLAUSES, 

subdividing  the  subject  matter  insured  in  connection  with  mettoraii' 

dum  clause,  258. 
"  running  landing  numbers,"  268. 
form  of  co-insurance  clause,  fire,  689. 
object  and  effect  of,  30,  140. 
rule  of  contribution  under,  188. 
form  of  percentage  co-insurance  clause,  fire,  689. 
form  of  average  clause,  fire,  590. 

form  of  average  clauses  in  floating  policies,  19,  690-691. 
AWA&D, 

See  Abbitbatiox. 


rtl4  Index. 

(Tlie  references  are  to  page*.  | 

15 

BAILEE, 

has  insurable  interest,  85,  86. 

common  carrier,  warehouseman,  factor,  broker,  etc.,  40. 
may  insure  his  interest  or  his  liability  or  also  for  owner,  46. 
owner  must  authorize  or  ratify  insurance,  139. 
BANKRUPTCY  AND  INSOLVENCY, 

test  of  solvency  of  insurance  company,  18. 
creditors  of  insured  may  secure  benefit  of  insurance,  46,  197. 
statutes  securing  to  wife  and  children  benefit  of  insurance,  676. 
statutes  protecting  all  beneficiaries  from  creditors'  claims,  577. 
transfer  or  assignment  in,  is  an  alienation  and  change  of  Interest,  167 
Insolvency  of  reinsured,  whether  a  defense  to  reinsurer,  187,  188. 
BABRATRY, 

definition  of,  238. 

distinguished  from  negligence,  238. 
wilfully  Improper  stowage  may  be,  238. 
examples  of,  by  fraud  or  illegality,  238,  239. 
by  master,  mariners,  part  owner,  239. 
BELIEF, 

See  Opnnoir. 
BENEFICIARY, 

Insured  may  designate  any  one  as,  though  without  Insurable  interest,  tt 

Interest  of,  vested  and  cannot  be  disturbed,  43. 

unless  terms  of  policy  or  rules  of  company  provide  otherwise,  48,  44. 

different  rule  in  Wisconsin,  44. 

If  beneficiary  dies  before  insured,  latter  may  make  new  appointment, 
44. 

Imt  not  If  consideration  was  paid  by  beneficiary,  44. 

If  new  appointment  is  not  made  representatives  of  first  appointee 
Uke,  45. 

statutes  allowing  change  of,  without  consent  of  first,  45,  577. 

liberal  construction  to  determine  Intent  of  Insured,  19«. 

parol  evidence  freely  received,  198. 

"legal  representatives  "  held  to  mean  wife  and  children,  198 

••lawful  heirs"  held  to  Include  widow,  198. 

wife  and  children  divide  equally,  198. 

children  born  after  contract,  included,  198. 

"child"  does  not  mean  grandchild,  198. 

designation  of,  must  comply  with  charter  and  by-laws,  198. 

■o  also  any  change  of  appointment,  198. 

court  will  sustain  appointment,  if  possible,  198,  199. 

if  first  beneficiary  paid  value,  statute  allowing  change  of,  not  applicable 
199. 
BENEFIT  SOCIETIES, 

boslness  of,  3. 

members  of,  governed  by  by-laws,  3. 

statutes  requiring  provisions  of  by-laws  to  be  set  forth  in  policy,  670. 

policy  or  certificate  of,  evidences  both  the  contract  and  membership,  Sll 

specimei  of  certificate,  by-laws  and  rules,  20. 

authority  of  representatives  of,  to  waive,  80. 


Index.  <j15 

[The  references  are  to  pages.] 

BZNEFIT  SOCIETIES— contutwet/. 

designation  or  change  of  beneficiary,  198,  199. 

premiams  often  paid  by  assessments,  206. 

are  bound  to  make  assessments  to  pay  losses,  4. 

statutes  protecting  beneficiaries  against  creditors,  577. 

statutes  providing  for  change  of  beneficiary,  677. 

special  regulations  of  mutual  companies  must  be  attactied  to  the  N«t9 
York  standard  fire  policy,  688. 
BENZINE, 

prohibited  by  memorandum  clause,  fire,  163. 

but  description  of  insured  property  may  impliedly  allow  its  use,  168. 

Harper  v.  New  York  City  Ins.  Co.,  308. 

Insignificant  quantities  not  prohibited,  164. 
BILLIARD  TABLE, 

kept  without  license,  460. 
BILLS  AND  BOOKS  OF  ACCOUNT. 

loss  of,  not  covered  by  policy,  168. 

the  insured  must  produce,  if  required,  180. 

but  not  obligated  to  produce,  if  impossible,  180. 

If  originals  destroyed,  due  diligence  required  to  procure  copies,  180. 

fraud  in  the  accounts  will  vitiate  the  insurance,  144. 

clause  of  New  York  standard  policy  in  relation  to,  687. 

meaning  of  the  clause,  180. 
BLOCKADE, 

may  be  a  ground  for  abandonment,  114.   • 

loss  by,  when  recoverable,  when  not,  237. 

warranted  not  to  abandon  in  case  of,  601. 
BLOOD-?PITTING  200. 
BOILER, 

insurance  of,  2. 

bursting  of,  from  wear  and  tear,  not  insured  against,  marine,  285. 
BOTTOMRY  AND  RESPONDENTIA, 

the  lender  has  insurable  interest,  38. 
BBIGHT'S  DISEASE, 

whether  serious,  200. 
BBOKER, 

his  relation  to  the  Insured,  26. 

his  relation  to  the  underwriter,  26,  87. 
See  AoEXT. 
BRONCHITIS, 

whether  a  disease,  200. 
BURNING, 

threats  of,  or  recent  attempts  at,  shou.d  be  disclosed,  68. 

wilful,  by  insured  is  a  good  defense,  136. 
BY-LAWS, 

See  Chabtxb  jlsd  Bt-ulw*. 
C 

CAMPHKNE, 

use  of,  prohibited,  309. 

Harper  ».  New  York  City  Ins.  Co.,  806, 


616  I>rDEX. 

[Th«  refer«nc«8  &r«  to  pagM.] 

CANCELI.ATION, 

provision  for,  in  New  York  standard  policy,  173. 

physical  cancellation  or  defacement,  not  necessary,  173. 

notice  of,  by  whom  and  to  whom  made,  173. 

until  it  reaches  its  destination  l)y  mail,  incomplete,  173. 

demand  for,  must  be  unconditional,  173. 

cannot  give  notice  of,  pending  an  approaching  conflagration,  804. 

refunding  ratable  proportion  of  premium,  174. 

agent  to  procure  insurance,  no  authority  to  cancel,  174. 

but  the  policy  may  designate  the  soliciting  broker  as  agent  to  rtcelTi 
notice  of,  302,  303. 

Massachusetts  form  of  clause,  fire,  174. 

consent  of  beneficiary  to,  is  necessary,  43. 

■tatutes  requiring  company  to  give  notice  of,  and  to  return  unearned 
premium,  574. 

statutes  requiring  company  to  cancel  on  request,  575. 

statutes  requiring  that  unearned  premiums  shall  be  returned  on,  67B. 
CAPTURE, 

definition  of  the  term,  237. 

distinguished  from  arrest,  237. 

gives  a  right  to  abandon,  112,  114,  236. 

loss  by,  when  not  recoverable,  235,  252. 

ransom  from,  recoverable,  236. 

"  warranted  free  from,"  means  what,  255,  258. 

warranted  free  from  capture  and  seizure,  664. 

Insurance  against  capture  only,  555. 
CARGO, 

what  may  be  Insured  as,  224. 

commencement  of  risk  on,  228. 

termination  of  the  risk  on,  228,  229. 

loss  of,  under  valued  policy,  118. 

loss  of,  under  open  policy,  118,  119. 

damaged  cargo,  119. 

particular  average  and  salvage  loss,  262. 

actual  total  loss  on,  112. 

constructive  total  loss  on,  113,  114. 

on  deck,  8,  224,  261. 

Jettison  of  deck  load  in  general  average,  124,  127-  240. 
CARLISLE  TABLE,  17. 
CARPENTERS, 

repairs  by,  152. 

property  held  for  repairs,  not  covered,  686. 
CARRIER, 

may  insure  his  own  interest,  40. 

or  the  interest  of  the  owner  also,  40. 

may  insure  against  his  liability,  40. 

Insurer  is  subrogated  to  rights  of  insured  against  negligent,  8& 
OAUSE, 

a  proximate  cause  distinguished  from  a  remote,  28,  29. 

direct  and  remote  results  of  fire,  135,  138,  139,  439. 

fall  of  building  held  reo'otA  result  of     re,  108. 


Index,  61t 

[The  references  are  to  pa^es.J 

CATJSE— continued. 

definition  of  proximate,  191,  192. 

loss  by  spread  of  fire,  when  proximately  caased,  191, 19S. 

direct  and  sole  cause  of  dealli,  215. 

Lawrence  c.  Accidental  Ins.  Co.,  522. 

proximate  cause,  marine  insurance,  instances  of,  241,  242,  444. 

remote  losses,  instances  of,  2V,i,  244.  251. 

question  of  proximate  and  remote  cause  under  different  aspects,  348. 

of  causes  conjoined,  which  is  controlling,  242,  243. 

rules  to  determine  the  question,  552. 

A  peril  excepted  and  a  sea  peri!  conjoined,  243. 

capture  and  gale  conjoined,  649. 

Green  v.  Elmslie,  649. 

stress  of  weather  and  ice  conjoined,  549. 

Brown  v.  St.  Nicholas  Ins.  Co.,  540. 

stranding  and  condemnation  conjoined,  556. 

stranding  and  forcible  taking  conjoined,  657. 

•ea  damage  and  ordinary  deterioration  combined,  247,  248. 

assignment  of  losses  In  particular  average  to  appropriate  cau8«,  24S, 
249. 
CHANGE, 

See  Alteration. 
CHARTER  AND  BT-LAWS, 

specimen  of  by-laws  and  rules,  20. 

operations  of  corporations  limited  to,  4,  78. 

proTlsion  of,  that  contract  must  be  in  writinjj,  49. 

directions  as  to  internal  management  not  binding  upon  outsiders,  76, 
79. 

matters  of  mere  form  may  be  waived,  79. 

essential  provisions  of,  cannot  be  waived,  377. 

held  tliat  charter  provision  against  double  insurance  without  written 
Indorsement  could  not  be  waived,  377. 

Couch  r.  City  Fire  Ins.  Co.,  377. 

whether  representatives  of  mutual  companies  may  waive,  80,  81. 

Eausal  v.  Minnesota  Farmers'  Mut.  Fire  Ins.  Asso.,  395. 

beneficiaries  must  be  appointed  in  accordance  with,  198,  199. 

statutes  requiring  provisions  of,  to  be  set  forth  in  policy,  570. 

Dakota  statute  requiring  terras  of  insurance  to  be  prescribed  by,  671. 

statutes  providing  that  corporate  seal  is  not  requisite  to  validity  of  pol- 
icy, 572. 

special  regulations  of  mutual  companies  must  be  attached  to  the  New. 
York  standard  fire  policy,  688. 
CHATTEL  MORTGAGE, 

giving,  is  not  an  alienation  under  the  policy,  15S,  167. 

contra,  155. 

is  not  an  increase  of  risk,  161,  166. 
contra,  151,  155. 

special  provision  of  New  York  standard  policy  relating  to,  164,  16& 
CHILD, 

Instirable  interest  of,  37. 

right*  in  polloT  upon  parent's  life,  4£. 


<J18  Index. 

[The  references  are  to  page*.] 
CHILD — continued. 

M  beneficiary,  198. 

statutes  protecting  against  parent's  creditors,  676. 
CLASSIFICATION  OF  RISKS, 

fire  and  marine  premiums  graded  according  to  risk,  14,  IS. 

life  premiums  according  to  age,  15. 

general  laws  of  average,  16. 

circumstances  wliicb  enter  into  calculation,  16,  16. 

information,  iiow  obtained  by  insurers,  16,  16. 
See  Mortuary  Tables. 
CLAUSES  OF  THE  POLICIES, 

clauses  of  fire  policy  consecutively  considered,  133-196. 

illustrative  leading  cases  from  the  reports,  439-486. 

clauses  of  life  policy  consecutively  considered,  197-212. 

Illustrative  leading  cases  from  the  reports,  486-513. 

clauses  of  accident  policy  consecutively  considered,  213-218. 

Illustrative  leading  cases  from  the  reports,  514-534. 

clauses  of  marine  policy  consecutively  considered,  219-262. 

Illustrative  leading  cases  from  the  reports,  535-565. 

special  clauses  often  attached  to  policy  as  riders,  262,  263. 

mortgagee,  form  of,  688;  effect  of,  174-176. 

co-Insurance,  forms  of,  689,  690;  efifect  of,  140. 

average,  form  of,  590;  efifect  of,  140. 

rent,  form  of,  692. 

use  and  occupancy,  form  of,  592. 

percentage  value  and  loss  clauses,  603,  604. 

collision  or  running  down,  form  of,  602;  effect  of,  233,  284. 

"warranted  free  from  average,"  256-258. 

"  warranted  free  from  capture,"  2.W. 

craft  and  lighterage  clause,  226. 

total  loss  clause,  256-258. 

"  running  landing  numbers,"  268. 

seaworthiness  in  time  policy,  103-108. 

York  Antwerp  Rules,  127. 

See  Contract;  Loss;  Wabbaittt. 
CLERKS  AND  SUB-AGENTS, 

authority  of,  76,  102. 
CODES, 

list  of  states  having  civil  codes  treating  of  Insurance,  669. 
CO-LNSURANCE, 

Insured  a  co-insurer,  marine,  when,  30,  118. 

pro  rata  clause,  fire,  183;  marine,  253. 

special  clauses,  fire,  589,  590. 

examples  of  adjustments  between  co-insuren,  603,  604. 
COLD, 

it  not  a  disease,  199. 
COLLISION, 

one  of  the  perils  insured  against,  233. 

damage  to  the  thing  insured,  covered  by  policy,  S33. 

UablUty  for  damage  to  other  ship  is  covered  only  by  ipeclc  ooUUioa 
eUose,  233. 


Index.  619 

[The  references  are  to  pages.] 

tiOLhlSIO'S— continued. 

damage  under  collision  clause  not  particular  average,  234. 

and  not  subject  to  five  per  cent  limitation,  234. 

form  of  collision  clause,  602. 
COMMENCEMENT  OF  RISK, 

See  Risk. 
COMMISSION  MERCHANT, 

may  insure  for  himself,  or  owner  or  both,  35,  86. 

will  hold  as  trustee  any  balance  above  liis  own  interest,  40. 

clause  respecting,  in  policy,  138,  590,  591. 
COMMISSIONER, 

of  insurance,  powers  and  duties  of,  4,  5. 
COMPANY, 

See  Insubeb. 
CONCEALMENT, 

from  early  times  insurance  a  contract  uberrinuB  Jldei,  8,  M. 

frank  disclosure  must  be  made,  56. 

obligation  rests  upon  both  parties,  56. 

inppression  of  material  facts  whether  innocent  or  fraudulent  svcidt,  M 

Phoenix  Life  Ins.  Co.  v.  Raddin,  318. 

concealment  by  agents,  57. 

when  principal  bound  by  agent's,  324. 

Proudfoot  V.  Montefiore,  324. 

when  principal  not  bound,  330. 

Blackburn  v.  Vigors,  330. 

master  of  ship  bound  to  disclose  material  facts,  327,  328,  337. 

In  fire  and  life,  concealment  not  fatal  unless  intentional,  57. 

why  rule  is  thus  modified,  57. 

what  must  be  disclosed  and  what  not,  68. 

insurer  not  presumed  to  know  contents  of  Lloyd's  Lists,  68. 

opinion  need  not  be  stated,  58. 

information  asked  for  is  in  general  all  that  is  required,  68. 

disclosures  called  for  by  application,  58. 

and  by  terms  of  flre  policy  itself,  58. 

but  other  information  must  not  be  withheld  in  bad  faith,  68.  60. 

mle  of,  more  strict  in  marine,  60. 

test  of  materiality,  61. 

fatal  though  not  connected  with  loss,  61,  66. 

question  of  materiality  usually  for  jury,  55,  62. 

date  of  closing  contract  is  the  significant  time,  61. 

if  action  is  brought   upon   contract  and  not   to   reform  it,  the  Umc 
named  in  the  policy  prevails,  305. 

Merchants'  Mut.  Ins.  Co.  v.  Lyman,  305. 

material  facts  ascertained  pending  negotiations  must  be  disclosed,  81. 

but  not  after  slip  is  initialed,  61. 

concealment  on  reinsurance,  187. 
CONCURRENT  POLICIES,  184,  186. 
CONCUSSION, 

loss  by,  from  other  premises  is  not  recoverable  onder  fire  policy,  138^ 
281. 


620  Index. 

[The  references  are  to  pagei.] 

CONDITIONS, 
natTire  of,  134. 

conditions  precedent  and  warranties  must  be  strictly  fulflUed,  62. 
inconvenience  or  inability  to  perform,  no  excuse  for  breach  of,  64,  6& 
effect  of  war,  65. 

Massachusetts  statute  in  regard  to  war,  681. 
breach  of,  though  not  connected  with  loss,  is  fatal,  66. 
only  temporary,  is  fatal,  67. 
makes  contract  voidable,  67. 
Standard  forms  of  fire  policies,  133,  584 

why  adopted,  133. 
classiflcatlon  of  the  conditions  in  fire  policy,  134. 
a  tirade  against  the  fine-print  conditions  formerly  in  use,  134 
statutes  relieving  from  technical  forfeitures  of,  571,  680,  681. 
See  Clauses  op  the  Policies;  Contbact;  Loss;  WABBAKTt. 
CONSIDERATION, 

the  stipulations  as  well  as  the  premlom  constitute  the  consideration 

134,  135. 
how  premium  to  be  paid,  135. 
when  returnable  and  when  not,  135. 

utatements  of  the  application  and  premium  are  the,  199,  SOS. 
premium  ts  in  fact  all  that  the  insurer  receives,  205. 
punctual  payment  of,  essential  if  policy  so  provides,  205. 
payment  of  future  premiums  not  promised,  but  made  the  condition  of 
continuance  of  contract,  45. 

See  Premium;  Waiveb. 
CONSTRUCTION  OF  CONTRACT, 

See  Consummation  of  Contbaot. 
CONSTRUCTIVE  TOTAL  LOSS, 
definition  of,  113. 

right  to  claim  is  determined  by  situation  at  time  of  abandonment,  118. 
distinguished  from  actual  total  loss,  113. 
on  ship,  113. 
on  goods,  113. 

on  freight,  114.  , 

rule  of,  adopted  in  U.  S.,  114. 
when  owing  to  sea  damage  and  ordinary  deterioration  combined,  S47| 

248. 
"  free  from  average  "  or  "  total  loss  only  "  covers,  267. 
See  Abandonment. 
OONSUMMATION  AND  CONSTRUCTION  OF  THE  CONTRACT, 
negotiation  of  the  insurance  contract,  through  agents  of  the  company 

20-26. 
coarse  of  business  in  closing  contract  often  aui  generit,il. 
requisites  of  a  complete  contract,  47,  48. 
seal  is  not  necessary,  372. 
meeting  of  the  minds  essential,  48,  300. 
Wlnne  v.  Niagara  Fire  Ins.  Co.,  314. 

particulars  of  the  contract  sometimes  understood  or  implied,  48. 
terms  may  be  settled  inferentially  by  past  dealings,  48. 
may  be  closed  by  parol  or  by  binding  slip,  49. 


Inpkx.  621 

[The  references  ar«  to  pa^s.] 

CONSUMMATION  AND  CONSTRUCTION  OF  THE  CONTRACT- 

continued. 
Merchants'  Mut.  Ins.  Co.  v.  Lyman,  306. 
Thompson  v.  Adaras,  295. 

bat  not  under  English  Stamp  Act  or  Georgia  Code,  49. 
■tatute  of  frauds  is  not  applicable,  49. 

though  charter  specifies  written  contract,  oral  may  be  valid,  49. 
agreement  to  Issue  policy  contemplates  the  terms  of  usual  policy,  40. 
terms  of  usual  policy  govern  though  policy  not  executed  or  delivered, 

49. 
ffisnred  presumed  to  know  contents,  though  policy  is  never  seen,  49, 60. 
LIpman  v.  Niagara  Fire  Ins.  Co.,  801. 
delivery  of  policy  is  not  controlling,  50. 

general  rules  of  law  are  applicable  to  construction  of  the  contract,  60. 
written  contract  the  only  evidence  of  what  it  purports  to  cover,  60, 
prior  negotiations  are  merged  in  the  policy,  60. 
Merchants'  Mutual  Ins.  Co.  v.  Lyman,  305. 

this  rule  is  disturbed  by  the  doctrine  of  waiver  and  estoppel,  69-71. 
reformation  when  allowed,  50,  365,  883. 
rescission  when  allowed,  50,  51. 
ooort  cannot  make  new  contract,  61. 
writing  prevails  over  printed  terms  of  policy,  61.3 
Harper  v.  N.  Y.  City  Ins.  Co.,  308. 
reason  for  rule  and  instances,  51,  52. 

■pecial  printed  clauses  prevail  over  general  printed  form,  62. 
general  and  well  known  usage  admissible,  52,  53. 
but  not  if  inconsistent  with  express  terms  of  policy,  63. 
parol  evidence  received  to  explain  subject  matter  of  Insurance,  186, 

137,  164. 
ambiguity  construed  against  the  Insurer,  53. 
that  construction  is  adopted  which  favors  indemnity,  68,  419. 
•tock  of  printer's  office  construed  to  cover  what,  163,  309. 
photographer's  stock  construed  to  cover  what,  163,  164 
forfeitures  are  not  favored,  53,  469. 
Wlnne  v.  Niagara  Fire  Ins.  Co.,  314. 

the  adoption  of  statutory  standard  forms  has  not  changed  the  rule,  Oft. 
law  of  the  place  where  the  contract  Is  made  generally  prevails,  64. 
the  contract  Is  made  where  the  last  act  necessary  to  complete  it  Is 

done,  64. 
standard  of  seaworthiness  determined  by  custom  of  port  to  which  the 

vessel  belongs,  64. 
what  questions  for  court  and  what  for  jury,  64,  66. 
misrepresentations  and  concealments  of  material  facts,  66-61. 
Phoenix  Life  Ins.  Co.  v.  Raddin,  318. 

in  a  warranty  the  question  of  materiality  is  eliminated,  62,  821. 
warranty  must  be  literally  fulfilled,  62-65. 
Thomson  v.  Weems,  339. 

inability  to  perform  no  excuse  for  forfeiture,  64. 
breach  avoids  though  not  connected  with  the  loss,  06, 07,  460 
warranty,  how  interpreted,  169. 
Burleigh  t.  Oebhard  Fire  Ins.  Co.,  360. 


622  Indbx. 

[The  references  are  to  pages.] 

CONSUMMATION  AND  CONSTRUCTION  OF  THE  CONTRACT— 

continued. 
materiality  is  generally  for  jury,  62. 
whether  reinstatement  clause  has  been  fairly  complied  with  Is  fot 

Jury,  141. 
question  of  fraud  is  for  Jury,  144. 
Chapman  o.  Pole,  475. 
question  of  intent  is  for  jury,  56. 
Behrens  v.  Germania  Fire  Ins.  Co.,  479. 
question  of  seaworthiness,  for  jury,  55,  106. 
question  of  reasonable  watch,  sometimes  for  Jury,  149. 
question  of  increase  of  rislc  usually  for  jury,  151,  454. 
question  what  is  vacancy  sometimes  for  jury,  165. 
neglect  to  use  reasonable  means  to  save  property  is  for  Jury,  107. 
sufficiency  of  proof  of  loss  is  properly  for  the  court,  178. 
reasonable  time  and  due  diligence  for  jury,  178. 
whether  sufficiency  of  examination  under  oath  Is  for  court  or  jv!j, 

180,  181. 
whether  loss  is  proximate  is  for  jury,  192. 
good  health  or  disease,  when  for  jury,  200. 
CoBhman  v.   United  States  Life  Ins.  Co.,  486. 
question  of  habits  may  be  for  the  jury,  202,  203. 
Thomson  v.  Weems,  339. 
serious  injury  may  be  for  jury,  204. 
Union  Mut.  Ins.  Co.  v.  Wilkinson,  354. 

hazardous  employment,  for  jury,  unless  contract  specifies,  216,  81ft. 
Toluntary  exposure  to  unnecessary  danger,  for  jury,  217,  218. 
due  diligence  for  personal  safety  may  be  for  jury,  218. 
Tuttle  V.  Travelers'  Ins.  Co.,  526. 

•fleet  of  charter  and  by-law  provisions  upon  the  contract,  78,  80. 
waiver  of  terms  of  the  contract,  68-85. 
waiver  and  estoppel  by  agents,  86-102. 

See  Clauses  of  the  Policies;  Contbaot;  Lobs;  Wabbahtt. 
CONSUMPTION, 

whether  a  serious  disease,  200. 
CONTRACT, 

earliest  written  form  of,  extant,  6. 

different  kinds  and  forms  of  policies,  18-20. 

negotiation  of,  by  agents,  20-26. 

principle  underlying,  is  Indemnity,  27. 

Castellain  v.  Preston,  282. 

aleatory  or  speculative,  27. 

but  compensation  not  profit  aimed  at,  27. 

sum  named  in,  is  the  limit  not  the  measure  of  recovery,  27. 

valued  policies,  27,  28. 

valued  policy  laws,  28;  list  of  tliem  573,  574;  why  not  commendable,  18. 

applicable  to  realty  when  "  wholly  destroyed,"  28. 
meaning  of  the  phrase  "  wholly  destroyed,"  discussed  in  Ampleman  » 

Citizens  Ins.  Co.,  28,  note, 
insurable  interest  essential,  27,  28. 
Htatntes  forbidding  wager,  28. 


Index.  658 

[The  references  are  to  pages.] 

Ox^NTRAUT-  -continued. 

insurance  does  not  always  give  full  indemnity,  28,  89. 

does  not  cover  remote  losses,  29. 

covers  negligence,  29,  30. 

Smith  V.  Scott,  269. 

mie  of  indemnity  qualified  where  insured  Is  a  co-insurer,  80,  81 

double  insurance  contribution,  31. 

pro  rata  or  contribution  clause,  Are,  183;  marine,  268. 

subrogation,  31-33;  subrogation  clause,  189. 

insurable  interest,  33-39. 

life  Insurance  not  strictly  a  contract  of  Indemnity,  88,  89. 

Dalby  v.  India  &  London  Life  Assur.  Co.,  271. 

measure  of  recovery  under  fire,  39-42. 

contract  is  personal  and  does  not  run  with  the  property,  42. 

Rayner  c.  Preston,  276. 

M  an  entirety,  42. 

Tyrle  v.  Fletcher,  265. 

sometimes  held  severable  to  avoid  forfeiture,  67. 

but  not  under  New  York  standard,  142. 

when  assignable,  42,  43,  161,  211. 

gives  a  vested  interest  to  beneficiary,  43,  46. 

does  not  establish  trust  relation  or  give  right  to  an  accounting,  4ft. 

ii  a  property  right  and  may  be  reached  by  creditors,  46. 

requisites  of,  47,  48. 

all  the  terms  must  be  agreed  upon,  48. 

terms  of,  sometimes  fixed  by  past  dealings,  48. 

may  be  parol,  49. 

delivery  of  not  essential,  50. 

rules  of  construction  of,  50-54. 

place  of  and  what  law  governs,  64. 

who  construes,  court  or  jury,  54,  55. 

effect  of  charter  and  by-law  provisions  on,  20,  49,  78-flO. 

cancellation  of.  173,  174. 

authority  of  agents  to  make  and  alter,  86-102. 

application  usually  a  part  of,  65,  169,  199. 

form  of  application,  life,  594. 

classified  list  of  statutes  governing,  569-683. 

standard  form  of  fire,  584. 

form  of  life,  696. 

form  of  accident,  598. 

form  of  marine,  600. 
Bee  Clauses  of  the  Policies;  Consummation   and  CoNSTBUCfnoM 

OF  Contbaot;  Loss;  Wabranty. 
CONTRIBUTION, 

where  double  insurance  exists  the  co-insurers  contribute  ratably,  81. 

definition  of  double  or  other  insurance,  146. 

at  common  law  insured  might  collect  amount  of  loss  under  any  policy 
leaving  co-insurers  to  adjust  among  themselves  by  contribution,  81. 

if  not  fully  insured  in  marine  tlie  insured  becomes  co-insurer,  30. 

in  America  marine  policies  attach  in  order  of  their  date,  31. 

double  insurance  does  not  apply  to  insurances  of  different  (nterMti 
though  upon  the  same  property,  183. 


(IM  Indbx. 

[The  references  are  to  pages.] 

CONTRIBUTION— continued. 

pro  rata  oi  contribution  clause  of  fire  policy,  183. 

meaning  and  effect  of  it,  ia3-187. 

when  one  co-insurer  settles  for  more  or  less  than  its  proper  share,  184 

concurrent  insurance,  184. 

non-concurrent  policies,  184-187,  604. 

rules  for  apportionment,  185,  186. 

apportionment  when  property  endangered  by  fire  is  removed  for  laf*- 
ty,  586. 

contribution  clause  of  the  American  marine  policy,  253,  254. 

meaning  and  effect  of  it,  2."')4-255. 

form  of  average  clause,  fire,  590. 

form  of  average  clauses  in  floating  policies,  fire,  690-692. 

general  average  contribution. 

See  General  Average. 

examples  of  contribution  between  co-insurers,  603,  604, 
CONVEYANCE, 

traveling  by  public  or  private,  what  is,  218. 

Northrup  v.  Railway  Pass.  Assur.  Co.,  532. 
CONVOY, 

in  time  of  war  important  to  know  whether  ship  to  sail  with,  10>. 

representation  that  ship  will  sail  with,  is  material,  69. 

desertion  of,  537,  538. 

Williams  v.  Shee,  536. 
COUNTERSIGNING  OF  POLICY, 

when,  determines  the  place  of  the  contract,  64. 

may  be  waived,  367. 
COURT  OR  JURY, 

See  Construction  of  the  Contbaot. 
CREDITORS, 

See  Bankruptcy. 

CREW.  WAGES  AND  MAINTENANCE  OP, 

See  Wages. 
CROPS, 

insurance  of,  standing  or  cat,  4. 
CUSTOM, 


CUSTOM  OF  LLOYD'S,  8. 


DAMAGE. 


See  Usage. 
D 

See  Loss. 


DEATH, 

insurance  against  loss  by,  1,  213. 

amount  of  loss  fixed  by  valued  policy,  18,  37. 

no  standard  form  of  policy,  197. 

on  death  of  insured,  loss  payable  to  whom,  197,  18R 

on  death  of  beneficiary  before  insured,  43-45. 

statutes  allowing  change  of  beneficiary,  .577,  678 

by  suicide,  207-209. 

Missouri  statute  in  regard  to  suicide,  581. 

presumption  of  no  suicide,  209. 

Mallory  v.  Travelers  Ins.  Co.,  604. 


Index.  6i26 

[The  reference*  are  to  pages.] 

DEATH— eoftttnued. 

presumption  of  sanity,  209. 

by  bands  of  Justice  or  in  violation  of  law,  209. 

Murray  v.  New  York  Life  Ins.  Co.,  608. 

whether  by  accident  or  disease,  213,  214,  216. 

Bacon  e.  U.  S.  Mut.  Ace.  Asso.,  614. 

evidence  of,  216. 

by  poison,  etc.,  213,  216,  216. 

direct  and  sole  cause  of,  216. 

Lawrence  v.  Accidental  Ins.  Co.,  622. 

by  exposure  to  obvious  danger,  217. 

Tnttle  V.  Travelers  Ins.  Co.,  526. 

by  omission  to  use  due  diligence,  218. 

Borkhard  v.  Travelers'  Ins.  Co.,  528. 

while  traveling  by  conveyance,  218. 

Northrup  v.  Railway  Pass.  Assur.  Co.,  632. 

In  naval  or  army  service  or  other  hazardous  employment,  16,  216,  SOI 
See  Lobs. 
DECAT, 

as  affecting  constmctlve  total  loss,  118,  662-664. 

as  affecting  seaworthiness,  107. 

ordinary  or  by  inherent  defect,  not  covered,  246,  261. 
DECK  LOAD, 

formerly  not  covered  by  ordinary  policy,  8. 

but  is  covered  if  justified  by  established  trade  usage,  224. 

Jettison  of,  not  general  average,  124,  125,  240 

unless  carried  in  accordance  with  trade  usage,  124,  126,  240. 

not  allowed  by  York  Antwerp  Rules,  127. 

contributes  in  general  average  though  not  contributed  for,  126,  261. 

clause  of  policy  in  regard  to,  261. 
DECLARATIONS, 

onder  open  and  floating  policies,  19,  226. 

rule  for  making,  under  marine  policies,  220. 
DEDUCTIONS,  NEW  FOR  OLD, 

from  cost  of  repairs  under  marine  policy,  120. 

from  cost  of  repairs  in  general  average,  130,  131. 

repairs  to  iron,  wooden  and  other  ships,  130,  131. 

not  applicable  to  temporary  repairs,  131. 

marine  rule  not  applicable  to  fire  policy,  139. 

but  by  fire  policy  proper  deduction  for  depreciation  Is  expressly  allowed, 
139. 

experts  may  give  their  evidence  as  to  values,  139. 
DEFECT,  INHERENT, 

loss  by,  is  not  covered  by  policy,  107,  246,  261. 

how  treated  when  combined  with  sea  damage,  247-250. 
DEFENSE, 

lack  of  insurable  interest  is,  27. 

concealment  of  material  facts  is,  66. 

unintentional  concealment,  fire  and  life,  is  not,  67 

misrepresentation  of  material  facts  is,  59. 

misstatement  of  opinion  is  not,  60. 

40 


Index. 

[The  references  are  to  pages.] 

DEFENSE— continued. 

the  company  may  defend  on  other  grounds  than  those  first  named,  8& 

parting  with  whole  interest  is,  150. 

Increasing  the  risk  is,  150. 

breach  of  stipulation  or  express  warranty  is,  62. 

breach  of  implied  warranty  Is,  103. 

bad  faith  or  misconduct  is,  56,  252. 

procuring  policy  with  design  to  commit  suicide  Is,  207. 

that  the  peril  insured  against  is  not  the  cause  of  loss,  is,  28,  29. 

that  the  peril  insured  against  is  not  the  proximate  cause  of  loss,  ii,  18. 

29,  241,  242. 
that  the  damage  is  too  remote  is,  29, 248,  244. 
eontributory  negligence  is  not,  29. 

■peciai  clauses  in  respect  to  negligence  govern,  167,  217,  218. 
that  the  property  was  duly  sacrificed  in  general  average  is  a  defense  to 
an  action  for  its  non-delivery,  428. 

See  Contbaot;  Loss;  Wabbastt. 
DKLAT, 

See  Dkviatioh. 
DELIBIUM  TREMENS, 

See  Habits. 
DELIVERY  OF  POLICY, 

not  essential  to  validity  of  contract,  47,  60. 
DEPARTMENT,  INSURANCE,  4,  5. 
DEPOSIT  ON  ACCOUNT  OF  GENERAL  AVERAOB, 

to  secure  immediate  delivery  of  cargo,  127. 
DESCRIPTION  OF  PROPERTY  INSURED, 

covers  what  is  naturally  appurtenant  to  It,  136,  187. 
Harper  v.  New  York  City  Ins.  Co.,  308, 
usage  may  explain  ambiguity  in,  137. 
of  ship,  cargo  and  freight,  covers  what,  223-225. 
general  description  controlled  by  writing,  61,  62,  224. 
also  by  special  printed  clauses,  62. 
DETERIORATION,  ORDINARY, 

not  covered  by  marine  policy,  219,  220,  231,  244-261. 
how  treated  when  combined  with  sea  damage,  247-261. 
See  Lobs. 
DEVIATION, 

defined  and  explained,  108, 109. 
fatal  though  risk  is  not  Increased,  100. 
when  Justifiable  and  when  not,  110. 
Burgess  o.  Equitable  Marine  Ins.  Co.,  420. 
delay  may  amount  to,  110. 

in  inland  time  policies  deviation  may  only  suspend  and  not  avoid,  lltt 
DISAPPEARANCES, 

excepted  in  accident  policy,  699. 
DISCRIMINATION, 

sUtutes  prohibiting,  In  rates  by  life  insurance  companies,  678. 
statutes  prohibiting,  against  colored  persons,  679. 
DISEASE, 

See  Hkalth. 


Index.  0S7 

[The  references  are  to  pagw.] 

DOUBLE  INSURANCE, 

See  Otheb  Insubakob. 
DROWNING,  DEATH  BY, 

when  within  the  accident  policy,  S14. 
DYNAMITE, 

forbidden  by  fire  policy,  685. 
DYSPEPSIA, 

whether  a  disease,  199,  800. 

B 

KMBAROO, 

what  it  Is,  237. 

gives  right  to  abandon,  837. 

except  in  certain  cases,  237. 
EMPLOYMENT, 

See  OoouPATiov. 
KNDOWMENT  POLICY, 

what  Is  an,  20. 
ENEMIES,  ALIEN, 

are  not  insurable,  220,  221. 

on  ground  of  public  policy,  221. 
INTIRETY  OF  CONTRACT, 

premium,  when  returnable,  42,  ISO. 

Tyrle  v.  Fletcher,  265.  

to  avoid  forfeiture  contract  when  made  severable,  07  47& 

express  provision  of  standard  fire  policies,  142. 

Smith  V.  Agricultural  Ins.  Co.,  471 

void  in  part,  void  altogether,  142. 
ESTOPPEL, 

See  Waitkb. 
ETHEB, 

forbidden  by  Are  policy,  585. 
EVIDENCE, 

valued  policies  conclusive,  unless  fraudulent,  27. 

written  contract  the  only,  of  what  it  purports  to  cover,  6C. 

prospectus  not  admissible  to  disturb  policy,  50. 

parol,  admissible  under  doctrine  of  waiver  and  estoppel,  60,  69,  70. 

parol  is  not  admissible  to  show  that  both  parties  knew  that  applio»- 
tlon  was  untrue,  365. 

waiver  by  parol,  consistent  with  sound  law,  73. 

parol,  admissible  to  explain  ambiguity,  62. 

what  appertains  to  the  subject  of  iniorance  may  be  shown  by  puol< 
137,  164. 

of  usage,  when  admissible,  62,  63. 

experts  may  give,  of  values,  130. 

presumption  that  death  is  by  accident  and  i  et  lolclde,  900, 

Mallory  v.  Travelers'  Ins.  Co.,  504. 

presumption  of  sanity,  209. 

presumption  of  loss  of  ship,  11,  283. 

of  injury  or  death,  216. 

whether  rules  of  evidence  are  disturbed  by  policy  itlpaUtiailty  tUL 


628  Indbx. 

[The  references  are  to  pagei.] 

EVIDENCE— conMnucd. 

date  of  policy  is  not  conclusive,  254. 

the  burden  of  proving  agency  of  the  company  is  upon  the  insured,  800 
EXAMINATION  UNDER  OATH, 

M  part  of  proofs  of  loss  under  fire  policy,  179-181. 

clause  of  standard  policy  requiring,  587. 

insured  must  submit  to,  if  required,  180. 

absence  of  the  insured  which  prevents,  avoids  policy,  181. 

need  answer  only  material  questions,  181. 

company  must  demand,  within  reasonable  time,  181. 

whether  sufficiency  of,  is  for  court  or  jury,  181. 

answers  intentionally  false  amount  to  perjury,  145. 
EXPECTATION  OF  LIFE, 

means  what,  17. 
EXPENDITURE, 

See  Oknkbai.  Aykbaok;  Suk  aitd  Labob  Clausb. 
EXPLOSION, 

gunpowder,  steam,  etc.,  whether  a  loss  by  fire,  185, 180. 

Scripture  t.  Lowell  Mutual  Fire  Ins.  Co.,  439. 

clause  of  the  fire  policy  In  regard  to,  167. 

bursting  of  a  boiler  not  covered  by  marine  policy,  836,  546. 
EXPLOSIVES, 

what,  are  forbidden  by  fire  policy,  585. 

effect  of  memorandum  clause,  163. 
EXTERNAL,  VIOLENT  AND  ACCIDENTAL  MFAKS,  214,  517,  6S1. 

F 

FACTORIES,  149. 
FALLING  BUILDINGS, 

clause  of  the  fire  policy  in  regard  to,  585. 

rale  of  liability  when  no  such  restriction,  108. 

fall  of  building  when  remote  result  of  fire,  108. 
FAMILY  PHYSICIAN, 

who  is,  201. 

statements  as  to,  201. 

usual  medical  attendant,  486. 

Cushman  v.  United  States  Life  Ins.  Co.,  480. 

warranty  as  to  medical  treatment  and  consulting  a  physician,  401. 

Cobb  V.  Covenant  Mut.  Ben.  Asso.,  491. 
FATHER, 

interest  in  lif«  of  child,  87. 
FIRE, 

what  is  loss  by,  in  flre  insurance,  135,  130l 

Scripture  v.  Lowell  Mut.  Fire  Ins.  Co.,  430. 

but  special  clauses  of  policy  govern,  136. 

liability  for  some  fire  losses  excluded  or  modified  by  express  terms  o< 
policy,  135,  136. 

loss  by  spread  of,  whether  proximate,  191, 192. 

loss  by,  when  allowed  in  general  average,  123,  124,  127. 

loss  by,  under  marine  policy,  234,  235. 


Index.  629 

[The  references  are  to  paffea.] 

FIRE — continued. 

nurine  fire  risk  corers  goods  on  land  and  In  warehonae  daring  tranlit, 
227,  236. 
flRK-WOKKS, 

whether  Included  In  the  risk,  163. 

forbidden  by  fire  policy,  685. 
FIRST  VOYAGE, 

what  Is  a,  120. 

deduction  new  materials  for  uld  not  allowed  in  England  on,  ISO. 
FITS, 

lost  by,  excluded,  215,  699. 

loss  by,  combined  with  peril  insured  against,  815. 

Lawrence  v.  Accidental  Ins.  Co.,  522. 
FLOATING  POLICY, 

what  it  Is,  19. 

forms  of  in  fire  Insurance,  690-592. 

contribution  among  co-insurers  under,  186. 

declarations  under  marine,  how  made,  220. 
in  what  order  they  take  effect,  226. 
FORCED  DISCHARGE, 

expense  of,  allowed  in  general  average,  124,  1S6. 

loss  by,  allowed  in  general  average,  124,  126. 

by  York  Antwerp  Rules,  129,  130. 
FORECLOSURE  OF  MORTGAGE, 

is  not  an  alienation  until  execution  of  deed,  157. 

■pecial  clause  of  the  fire  policy  in  regard  to,  165. 
FOREIGN  COMPANIES, 

allowed  to  do  business  subject  to  statutory  restrictlont,  4,  5. 

nay  be  altogether  excluded  from  the  state,  5. 

instances  of  some  of  the  earliest,  11-13. 

sometimes  employ  general  managers, 

retaliatory  laws  against,  581,  582. 

anti-compact  laws  against,  582,  583. 
FOREIGN  GENERAL  AVERAGE, 

adjustment  of,  binding,  126. 

where  to  be  made,  126. 

incorporated  into  adjustment  between  underwriters  and  insurei   96&. 
FORFEITURE, 

is  not  favored,  53. 

Wlnne  v.  Niagara  Fire  Ins.  Co.,  314. 

temporary,  avoids  and  does  not  suspend,  67,  460. 

Kyte  V.  Commercial  Union  Assur.  Co.,  467. 

■tatutei  relieving  from  technical,  571,  680. 

See  Clauses  of  the  Policies;  Comtbaot;  Lobs,  Wabbabtt. 
FORMS, 

of  policies,  application,  special  clauses  and  proofs  of  loss,  584-608. 
of  New  York  standard  fire  policy,  584 

form  of  New  York  stani^.ard  policy  is  applicable  to  what  other  statM 
1.S3,  673. 
FOUNDERING, 

one  of  the  perils  of  the  sea,  282. 


680  Index. 

[The  references  are  to  pages.] 

FOUKDERISG— continued. 

loss  by,  when  recoverable,  233. 

presumption  of,  when  arises,  233. 
FRAUD  AND  FALSE  SWEARING, 

bad  faith  vitiates  the  contract,  8,  56,  58,  69,  220. 

M  there  is  collusion  between  the  company's  agent  and  the  Insared  th« 
company  is  not  estopped,  06,  412. 

arson,  136. 

the  speculation  must  be  a  fair  one,  219. 

clause  of  the  fire  policy  in  regard  to,  143. 

overvaluation  or  false  swearing  in  proofs  of  loss,  144,  145. 

Chapman  e.  Pole,  476. 

overvaluation  or  mistakes  must  be  Intentional  to  avoid,  144,  145. 

Behrens  v.  Germania  Fire  Ins.  Co.,  479. 

question  of,  generally  for  jury,  144. 

question  of,  when  for  court,  144,  145. 

statements  intentionally  false  amount  to  perjury,  145. 

fraud  in  part  vitiates  the  whole,  142. 

barratry  involves  fraud  or  illegality,  238. 
FRAUDS,  STATUTE  OF, 

oral  contract  of  Insurance  not  within,  49. 

policy  of  reinsurance  not  within,  187. 
"FREE  FROM  AVERAGE," 

In  the  memorandum  of  marine  policy,  603. 

meaning  of  the  warranty,  256-258. 

"liable  for  total  loss  only,"  257,  258. 

Great  Western  Ins.  Co.  v.  Fogarty,  560. 

whether  constructive  total  loss  is  covered,  257. 

total  loss  of  part,  258. 
"  FREE  FROM  CAPTURE,"  266,  266,  654. 
FREIGHT, 

what  may  be  Insured  as,  225. 

how  valued  under  an  open  policy,  110. 

commencement  of  risk  on,  229,  230. 

termination  of  risk  on,  229,  230. 

constructive  total  loss  on,  114, 116. 

freight  previous  and  subsequent  to  loss,  117. 

valuation  apportioned  where  part  of  subject  exposed  to  risk,  11& 

loss  of.  In  general  average,  131,  132. 

contributory  value  of,  in  general  average,  182. 
FUEL, 

cargo  consumed  as,  when  allowed  In  general  average,  128. 
FURNITURE, 

■cope  of  the  word  construed  in  favor  of  insured,  136,  187. 

only  protected  by  policy  in  designated  location,  138. 

Lyons  v.  Providence  Washington  Ins.  Co.,  447. 

what  la  covered  by.  In  marine  policy,  224. 

G 

nndar  fire  poUey,  16S, 


Indkx .  681 

[The  references  are  to  pages.] 

OAS — continued. 

explosion  by,  167. 

under  accident  policy,  216. 

ander  marine  policy,  444. 
GASOLINE, 

forbidden  by  fire  policy,  685. 
GASTRITIS, 

whether  a  disease,  200. 
GENERAL  AVERAGE, 

definition  of,  121. 

distinction  between  general  and  particular  average,  131. 

origin  and  antiquity  of,  121. 

general  average  losses  wheu  allowed,  122. 

most  be  voluntary,  necessary  and  successful,  122. 

but  success  need  not  be  shown  to  be  caused  by  the  general  aTeng*  Ml| 
122. 

most  bulky  and  least  valuable  articles  should  be  first  jettlBoned,  Itt 

starting  point,  danger,  objective  point,  safety,  123. 

who  may  perform  the  general  average  act,  123. 

party  whose  negligence  has  necessitated,  cannot  benefit  bj,  1S8» 

ucrificei  enumerated,  123,  124. 

deck-load,  124,  125. 

Toluntary  stranding,  125. 

expenses  allowable  in,  125,  126. 

the  master  may  sell  the  cargo  if  necessary,  487. 

master's  duty  to  communicate  with  owners  of  cargo  If  poulblti  aad 
get  instructions,  126. 

adjustment  in,  126,  127. 

York  Antwerp  Rules,  127-132. 

contributory  value  of  freight,  132. 

Justice  Clifford's  discussion  of  the  whole  sasject,  428-488. 

Star  of  Hope,  428-438. 
GOOD  FAITH, 

essential  to  validity  of  contract,  8,  66,  230. 
GOOD  HEALTH, 

See  Hbalth. 
GOOD  SAFETY, 

meaning  of  the  phrase,  227-229. 

when  a  ship  arrives  In,  638. 

Lldgett  V.  Secretan,  638. 
GOODS, 

See  CABoa 
GOODS  ON  TRUST,  188,  690,  691. 
GOUT,  2oa 
GRANDCHILD, 

child  is  not,  108. 
GROUNDING,  ORDINARY, 

not  a  sea  peril,  232. 

distinguished  from  stranding,  2C8-261. 

Magnus  «.  Buttemer,  658. 
gUABANTEE  INSURAJiCB,  2. 


682  Index. 

[The  references  ure  to  p&gee.] 

GUNPOWDER, 

keeping  of,  prohibited,  163,  685. 

explosion  by,  is  loss  by  fire,  135. 

Scripture  v.  Lowell  Mut.  Fire  Ins.  Co.,  439. 

loss  by  concussion  from  other  premises  is  not  loss  by  flie,    80,  ISl. 

permit  to  keep,  does  not  authorize  manufacture,  155. 

H 

HABITS, 

statements  as  to,  202,  203. 

a  question  of  fact,  not  of  opinion,  203. 

temperate,  means  what,  202. 

Thomson  tj.  Weems,  339. 

question  of  habits  often  for  Jury,  55,  203. 
HAIL-STORMS, 

Insurance  against,  2. 
HALF  PER  CENT, 

provision  for  retaining  on  return  of  premium,  mArine,  802. 
HAZARDOUS, 

risks,  15,  16. 

certain  articles  excluded,  Are,  163,  585. 

permit  to  remain  In  hazardous  region,  203. 

occupation  under  accident  policy,  215,  216. 

goods  covered  by  floating  fire  policy,  590,  591. 

limitation  of  liability  for  loss  of  certain  articles,  marine,  256-268,80& 
HEADACHE, 

whether  a  disease,  199. 
HEALTH, 

examination  to  ascertain  condition  of,  15. 

good  health  means  what,  109,  200. 

Cnshman  r.  U.  S.  Life  Ins.  Co.,  486. 

breach  of  warranty  of,  199,  843,  345. 

whether  disorder  amounts  to  disease  is  often  for  jury,  190,  900. 

family  physician,  medical  attendance,  medical  treatment,  iOl. 

Cnshman  v.  U.  S.  Life  Ins.  Co.,  486. 

Cobb  0.  Covenant  Mut.  Ben.  Asso.,  401. 

what  is  a  serious  injury  to,  357. 

Uat  of  diseases  enumerated  in  application,  696.' 

what  is  an  accidental  Injury,  213-218. 
HEAT, 

loss  by,  185. 
HEIRS, 

as  beneflciarlei,  198. 
HERNIA, 

See  RuFTUBK. 
HUSBAND. 

Insurable  Interest  of,  in  life  of  wife,  37. 

assignment  by,  of  life  policy  in  favor  of  wife,  43. 

transfer  from,  to  wife  is  a  change  of  interest,  169,  160. 

Walton  t.  Agricultural  Ins.  Co.,  462. 


Index.  688 

(The  references  are  to  pages.) 

1 

lOB-CLAUSE,  243. 

Brown  v.  St.  Nicholas  Ins.  Co.,  649. 
IGNITION, 

whether  necessary  to  constitute  loss  by  fire,  13ft. 
ILLEGALITY, 

implied  warranty  against,  in  marine,  110-llJ. 
ILLNESS,  SERIOUS. 

See  Health. 
IMPLIED  WARRANTY. 

INCENDIARISM, 


See  Wa-Kbaiitt. 
See  Abboh. 


INCONTESTABLE, 

life  policy  sometimes  made  so,  after  two  years,  218. 

statutes  providing  against  forfeitures,  671,  680,  681. 
INCREASE  OF  RISK, 

may  avoid  policy  without  express  provision,  8, 160. 

clause  against,  in  standard  fire  policies,  160-152. 

trivial  variations  necessarily  incident  to  the  use  of  the  property  do  not 
avoid,  160. 

whether  alteration  is  material  is  generally  for  jury,  16L 

Williams  V.  People's  Fire  Ins  Co.,  452. 

creating  incumbrances,  161. 

alterations  in  the  risk  made  by  others,  152. 

whether  temporary  increase  avoids  or  suspends,  15S. 

Kyte  t.  Commercial  Union  Assur.  Co.,  467. 
INCUMBRANCE, 

misstatement  as  to,  avoids,  63. 

whether  executing  chattel  mortgage  is  fatal,  164,  166. 

executing  chattel  mortgage  avoids  (N.  Y.  standard),  164. 

peal  estate  mortgages,  158,  161. 

Involuntary  incumbrances  are  not  fatal,  161. 

warranty  against,  471. 

Smith  r.  Agricultural  Ins.  Co.,  471. 
INDEMNITY, 

insurance  is  in  general  a  contract  of,  27,  419. 
life  insurance  not  strictly  so,  38,  39. 

Dalby  v.  India  &  London  Life  Assur.  Co.,  271. 

rule  of,  modified  under  valued  policies,  27. 

Indemnity  secured  only  for  proximate  results  of  the  peril,  29,  SO. 

Insured  a  co-insurer  in  marine,  if  not  fully  insured,  30. 

that  construction  of  the  contract  is  preferred  which  favors,  68. 

rule  of,  sometimes  modified  in  case  of  abandonment,  116,  117. 

rule  of,  sometimes  modified  in  reinsurance,  187,  188. 

rule  of,  sometimes  modified  under  sue  and  labor  clause,  252,  290. 

English  court  inclined  to  cling  rigidly  to  doctrine  of,  41,  176. 

Castellain  v.  Preston,  282. 
INDORSEMENTS, 

conditions  of  fire  policy  to  be  waived  only  by,  92-94,  194-196,  68& 

but  oral  waivers  may  be  made  by  autliorized  agent,  93,  94. 


684  Index. 

[The  references  are  to  pages.] 

INJURY. 

See  Health. 
INSANITY, 

no  excnss  for  breach  of  warranty,  64,  65. 

held  an  excuse  for  not  verifying  proofs  of  loss,  178,  179l 

as  excuse  for  taking  one's  own  life,  207-209. 

suicide  does  not  establish,  209. 

presumption  of  sanity,  209. 
INSOLVENCY, 

See  BAJfKBUPTOT. 
INSURABLE  INTEREST, 

necessity  of,  27. 

statutes  against  wagering  contracts,  28. 

what  constitutes,  (flre,)  33,  34. 

who  may  have,  35. 

mere  trespasser  or  Intruder  has  no,  36. 

different  insurable  interests  in  same  property,  35. 

one  interested  with  others  may  insure  fur  them,  as  well  as  for  him 
self,  36. 

what  constitutes,  and  who  may  have,  (life,)  36,  37. 

what  constitutes,  and  who  may  have,  (marine,)  37,  38. 

payee  or  assignee  of  life  policy  need  not  have,  38. 

when  must  it  exist,  38. 

when  temporary  suspension  does  not  avoid,  39. 

insurable  interest  as  related  to  measure  of  damages,  89-lS. 
INSURANCE, 

nature  and  Importance  of,  1,  2. 

different  kinds  of,  1,  2. 

conditions  necessary  to  a  successful  system  of,  2,  8. 

origin  of,  5,  6. 

earliest  policy  extant,  6,  7. 

origin  of  flre  Insurance,  11,  12. 

origin  of  life  and  accident  Insurance,  12-14. 

real  estate  title  insurance,  14. 

different  kinds  of  policies,  18-20. 

companies,  3. 

instances  of  the  earliest  and  the  largest  companies,  9-14 
See  Claubeh  of  the  Polioies;  Oontbaot. 
INSURED, 

who  may  be,  83-S8. 

vust  have  an  Insurable  interest,  27. 

contract  with,  is  personal,  42. 

must  be  named  or  described  in  policy,  47,  48. 

mast  act  In  good  faith,  56. 

may  ratify  insurance  made  for  his  benefit  by  another,  139. 

is  not  changed  by  an  Indorsement  naming  a  third  party  payM,  1T4 

alien  enemy  cannot  be,  220,  221. 
INSURERS, 

were  originally  individuals,  7. 

now  ordinarily  corporations,  3. 

«tock,  mutoal  and  mixed  companies,  8. 


Index.  6S£ 

[The  references  are  to  pages.] 

CN8URERS— eonfmuedf. 

•cope  of  their  business  limited  by  statute,  4. 

statutes  governing  the  conduct  of  their  business,  4,  5. 

foreign  insurance  companies,  5. 

largest  American  marine  company,  11. 

•arliest  and  largest  fire  companies,  11,  12. 

earliest  and  largest  life  companies,  12,  13,  14. 

real  estate  title  companies,  14. 

are  subrogated  to  rights  of  insured  against  wrong-doer,  81, 82,  8&,  IW- 
193. 

act  by  agents,  20-26,  86,  87. 
INTEMPERANCE, 

See  Habits. 
INTERIM  RECEIPT,  22,  23. 
INTOXICATING  LIQUORS, 

illegal  sale  of,  457. 

E3rte  V.  Commercial  Union  Assur.  Ca,  457. 
IRON  SHIPS, 

deductions  from  cost  of  repairs  to,  allowed  in  general  average,  180,    Jl. 

J 

JETTISON, 

risk  of,  is  covered  by  the  policy,  239,  240. 

loss  by,  for  the  common  safety,  allowed  in  general  average,  122, 128 
124,  127. 
as  also  loss  consequent  upon,  240. 
of  goods  on  deck  whether  allowed  in  general  average,  124, 126, 127,  240l 
of  goods  on  deck  whether  covered  by  policy,  252. 
of  goods,  on  account  of  vice  propre,  not  allowed,  261. 
JEWELS, 

not  covered  by  ordinary  fire  policy,  686. 
JOINT  LIFE  POLICY,  19. 
JOINT  OWNERS, 

if  insured  together,  shifting  of  interest  between,  is  not  fatal  alienatioo, 
159, 160,  468. 
JUDGMENTS, 

do  not  generally  void  the  policy,  161. 
JURY, 

See  CoNSTBUonoN  op  Contract. 

K 

KEROSENE,  163,  686. 

nse  of,  whether  an  increase  of  risk,  452. 

Williams  V.  People's  Fire  Ins  Co.,  452. 

permit  to  keep,  does  not  authorize  manufacture,  466. 
KINSHIP, 

ties  of,  do  not  constitute  an  insurable  interest,  37. 

sometimes  insurable  interest  conclusively  presumed  from,  87. 
KNOWLEDGE  OF  AGENT, 

when  will  operate  as  waiver  or  estoppel,  76,  77,  82,  99,  lOOt 

Van  Schoick  r.  Niagara  Fire  Ins.  Co.,  362. 

mere  knowledge  of  forfeiture  is  not  a  waiver,  82. 


636  Index. 

[The  references  are  to  pages.) 

risk  on,  covered  by  marine  policy,  when,  227. 
LANDING  NUMBERS, 

average  clause  "  running  landing  numbers,"  258. 
LAW,  DEATH  OR  INJURY  IN  VIOLATION  OF,  209,  217. 

Murray  v.  New  York  Life  Ins.  Co.,  508. 
LEADING  CASES,  265-666. 

analysis  of,  in  table  of  contenU,  xvni-xxi. 

table  of,  xxm. 
LEASE, 

no  alienation,  84. 
LEASED  GROUND,  164. 
LEGALITY, 

See  Illegautt. 
LETTERS  OF  MART  AND  COUNTERMART,  236. 
LIABILITY, 

the  liabilities  of  an  insurance  company  are  what,  and  how  calcalatad! 
to  test  solvency,  17,  18. 

is  insurable,  36,  40,  187. 

wrong-doer  primarily  liable,  and  insurer  secondarily,  31,  189. 
See  Loss. 
LIBERTY  TO  CALL,  223,  230. 
LIEN, 

premium  notes  sometimes  a,  4. 

apon  property  gives  a  right  to  insure,  35. 

of  ship  owner  for  general  average,  127. 

See  Incumbkanob. 
LIGHTERAGE,  RISK  OF, 

from  shore  to  ship,  226. 

from  ship  to  shore,  228,  229. 
LIGHTNING, 

loss  by,  4,  135,  136,  167,  441,  442. 
LIMITATION  OF  SUIT, 

clause  regarding,  may  be  waived  by  representatives  of  mutnal  oompi^ 
nies,  80. 

limit  as  to  time  is  valid,  193. 

whether  limitation  begins  to  run  from  flre  or  service  of  prx>fs,  103. 

limit  as  to  forum  is  invalid,  193. 

clause  held  not  applicable  to  reinsurance,  189. 

statutes  prohibiting  certain  limitations,  672,  673. 

clause  respecting,  in  fire  policy,  588. 

clause  respecting,  in  accident  policy,  699, 
LIMITS.  SETTLED,  203. 
LIVE  STOCK, 

insured,  2. 
LIVER, 

disorder  of,  whether  a  discs je,  200. 

Cushman  v.  U.  S.  Life  Ins.  Co.,  486. 
LLOYD'S, 

origin  and  rise  of,  0. 
LLOYD'S  AGENTS,  10. 


Index.  687 

[The  references  are  to  pages.] 

LLOYD'S  CAPTAINS'  REGISTER,  11. 

LLOYD'S,  CUSTOM  OF,  8. 

LLOYD'S  LISTS,  9,  11. 

LLOYD'S  POLICY,  9,  10. 

LLOYD'S  REGISTER  OF  SHIPPINO,  11. 

LOADING, 

or  margin  is  what,  17. 
LOANS, 

life  companies  often  make,  with  the  policy  at  collateral,  4. 
LOCATION, 

See  Place 
LOSS, 

•accessive  losses  under  one  policy,  27. 

only  proximate  resolts  of,  are  covered,  28,  20,  139,  191-193,  241-S44, 
444. 

fall  of  a  building  seven  days  after  fire,  a  remote  loss,  168. 

covered,  notwithstanding  contributory  negligence,  29.  30. 

Smith  0.  Scott,  269. 

not  covered  if  directly  attributable  to  misconduct  of  the  insured,  60, 
143,  144,  207,  220,  239,  241,  251,  252. 

ipecial  provisions  excepting  results  of  negligence  prevail,  167, 217, 218. 

measure  of  recovery  for  marine,  80,  31,  118. 

contribution  to,  where  double  insurance  exists,  31,  183-187,  263,  264. 

examples  of  contribution  between  co-insurers,  603,  604. 

amount  of,  may  be  settled  in  advance,  18,  27. 

rule  of,  under  valued  policies,  18,  27, 118. 

rule  of,  under  floating  policies,  19. 

life  policies  almost  always  valued,  18. 

a  life  may  be  valued  at  any  agreed  sum,  87. 

amount  of,  under  creditor's  policy,  37. 

Dalby  r.  India  &  London  Life  Assur.  Co.,  271. 

amount  of,  by  owner  of  hypothecated  ship,  38. 

Indemnity  the  general  rule  of,  39. 

measure  of,  as  related  to  insurable  interest,  39-42. 

amount  of,  recoverable  by  owner,  mortgagor,  mortgagee,  common  cai 
rier,  warehouseman,  bailee,  lessor,  lessee,  vendor,  vendee,  39-41. 

owner  entitled  to  market  value  at  time  of  fire,  39. 

no  deductions  from  value  made  for  incumbrances,  39. 

■ustained  by  reinsured,  41,  42. 

for  use  and  occupation,  42. 

adjusted  according  to  the  law  of  the  place  of  the  contract,  64. 

by  unseaworthiness,  103-106. 

Dixon  V.  Sadler,  415. 

by  deviation,  108-110. 

Burgess  v.  Equitable  Marine  Ins.  Co.,  420. 

by  illegality,  110-112. 

actcal  total,  112,  113. 

Great  Western  Ins.  Co.  v.  Fogarty,  660. 

constiuctive  total,  113-115. 

amount  of,  under  open  marine  policy,  to  ship,  cargo,  freight,  118,  118L 

deductions,  new  materials  for  old  (marine),  120. 


688  Index. 

[The  references  are  to  pag«A.| 

LOSS—  -continued. 

underwriters  liable  for  general  average,  121-132. 

Star  of  Hope,  428. 
1.  FiKK  Policy. 

by  fire,  135,  136. 

Scripture  v.  Lowell  Mutual  Fire  Ins.  Co.,  439. 

by  beat,  water,  exposure,  theft,  wind,  smoke,  135,  136,  43C. 

to  whom  it  may  concern,  138,  139. 

elause  in  New  York  standard  policy  defining  rule  of,  139,  14.^. 

under  rebuilding  or  reinstatement  clause,  140,  141. 

by  fraud  or  arson,  143-145. 

Chapman  v.  Pole,  475. 

by  Invasion,  riot,  usurped  power,  theft,  neglect,  167. 

by  explosion,  135,  130,  443,  444. 

by  lightning,  4,  136,  136,  167,  441,  442. 

to  accounts,  bills,  and  other  memorandum  articles,  168,  686,  6&^ 

on  removal  for  safety,  177,  686. 

notice  and  account  or  proofs  of,  177-179,  587. 

form  of  proofs  of  loss,  693. 

under  appraisal  or  arbitration  clause,  181,  182,  689. 

under  contribution  or  pro  rata  clause,  183-187. 

rent  clause,  592 ;  use  and  occupancy  clause,  592. 
B.  LiFB  AND  Accident  Policy, 

loss  is  any  amount  agreed  upon,  18,  87. 

death  by  suicide,  207-209. 

Mallory  v.  Travelers'  Ins.  Co.,  504. 

death  by  hands  of  justice  or  in  violation  of  law,  209,  210. 

Murray  v.  New  York  Life  Ins.  Co.,  508. 

by  accidental  Injury,  213,  214. 

by  external,  violent  and  accidental  means,  214,  216,  621. 

Bacon  v.  U.  S.  Mut.  Accident  Asso.,  514. 

by  drowning,  214. 

by  Intentional  injuries  inflicted  by  others,  216. 

by  Injuries  effected  independently  of  all  other  causes,  21& 

by  peril  and  excepted  cause  combined,  216. 

Lawrence  v.  Accidental  Ins.  Co.,  522. 

roles  where  different  causes  are  combined,  562. 

by  fits,  215. 

by  fright,  215. 

of  two  entire  feet,  216. 

eansing  total  disability,  216. 

•xcluded  if  no  visible  mark  on  body,  216. 

by  outward  and  visible  means,  507. 

by  poison,  gas,  vapor,  215,  216,  217. 

by  disease,  217,  514. 

from  violating  law,  217. 

from  voluntary  exposure  to  unnecessary  danger,  217. 

Tuttle  V.  Travelers'  Ins.  Co.,  £26. 

from  being  on  roadbed,  217. 

Burkhard  v.  Travelers'  Ins,  Co.,  628. 

from  exposure  to  obvious  risk,  217,  218. 


Index.  689 

[The  references  are  to  page*.] 
LOSS — continued. 

fiom  entering  or  leaving  steam  cars  in  motion,  218. 
from  omitting  to  use  due  diligence,  218. 
received  while  traveling  in  conveyance,  218. 
Northrup  o.  Railway  Pass.  Assur.  Co.,  632. 
disappearances  are  not  covered,  599. 
8.  Makink  Poliot. 
loss  if  caused  proximately  by  misconduct  of  the  insared,  not  recover*- 

ble,  105,  220,  241. 
before  contract  is  made,  "  lost  or  not  lost,"  221,  827. 
at  port,  222. 

by  foundering,  grounding,  co'Iision,  stress  of  weather,  232-234. 
by  fire,  perils  of  war,  arrests,  restraints,  barratry,  jettison,  234-240. 
pirates,  rovers  and  thieves,  distinguished  from  men-of-war  and  en* 

mles,  236. 
capture,  embargo,  blockade,  237. 
♦♦all  other  perils,"  240,  241. 

Thames  &  Mersey  Marine  Ins.  Co.  v.  Hamilton,  648. 
by  bursting  of  boiler,  rats,  worms,  explosions,  241. 
by  delay,  wear  and  tear,  original  defect,  244-246. 
list  of  losses  not  covered,  260-252. 
Magnus  v,  Buttemer,  558. 
by  carelessness  or  misconduct,  261,  262. 
of  deck-load,  252,  261. 
under  sue  and  labor  clause,  252,  253. 
trivial  losses  under  five  per  cent  not  covered,  268. 
eontribution  or  other  assurance  clause,  253,  264. 
warranted  free  from  capture,  255,  256. 
Green  t.  Elmslie,  549. 
limitation  of,  by  memorandum,  266-268b 
by  stranding,  258,  261. 
by  wet,  breakage,  leakage,  261. 
articles  contraband  of  war,  not  covered,  601. 
average,  distinguished  from  salvage  loss,  262. 
under  collision  clause,  233,  602,  603. 
by  causes  combined,  243,  247,  552. 
whether  loss  is  by  stranding  or  condemnation,  660. 
whether  loss  is  by  stranding  or  forcible  taking,  667- 
total  loss  or  free  from  average,  660. 
of  cargo  of  machinery,  560. 
of  cargo  of  hides,  563. 
of  cargo  of  corn,  563. 
of  cargo  of  jerked  beef,  663. 
of  a  carriage,  564. 
adjustment  of  the  loss,  263. 

See  Clauses  of  the  Policibs;  Contbaot;  WABBAXTf 
•  LOST  OR  NOT  LOST."  221,  827. 

M 

MACHINERY,  DAMAGE  TO, 

when  not  covered  by  marine  policy,  231,  244,  245,  260,  261. 


MO  Index. 

[The  references  are  to  pagM. ) 

MACHINERY,  DAMAGE  TO— contmusd. 

Thames  «fe  Mersey  Marine  Ins.  Co.  v.  Ilamllton,  K4S. 
MAGISTRATE'S  CERTIFICATE, 

If  required,  must  be  procured,  179. 

nearest  magistrate,  179. 

statutes  forbidding  the  requirement,  674. 
MAILING, 

place  of  contract  where  policy  Is  mailed  from  the  home  ofBo«,  S4 

mailing  of  preliminary  notice  of  loss  considered  sufficient,  17S. 

but  proofs  of  loss  must  be  received,  178. 

notice  of  cancellation  must  be  received,  173. 

mailing  notice  of  assessment,  whether  sofflcient,  906. 
MANAGERS,  24. 

authority  of,  to  waive,  96. 
MANSFIELD,  Chief  Justice,  conspicuous  in  shaping  early  Insorano*  law,  I 
MANUFACTURING  ESTABLISHMENTS,  149. 
MANUSCRIPTS, 

not  covered  by  ordinary  flre  policy,  586. 
MAPS, 

of  insurance  risks  in  cities,  16. 
MAEGIN, 

or  loading  means  what,  17. 
MARGIN  OF  POLICY, 

special  clauses  or  words  written  or  printed  upon,  control,  6S. 

a  warranty  may  appear  upon,  62. 
MATERIALITY, 

test  of,  61. 

question  of,  for  jury,  62. 

question  of,  eliminated  by  a  warranty,  62,  63. 

statutes  relieving  from  technical  forfeitures,  671. 
MATERIALS,  OLD, 

See  DKDUonoifS. 
MECHANICS,  162,  163. 
MEDICAL  ATTENDANT,  201. 

Cushman  v.  United  States  Life  Ins.  Co.,  486. 

Cobb  V.  Covenant  Mut.  Ben.  Asso.,  491. 
MEMBERSHIP, 

See  Mutual  Cokpakiks. 
MEMORANDUM, 

clauses  in  fire  policy,  163,  164,  168,  686,  686. 

In  marine  policy,  256,  602. 

the  percentages  how  computed,  267. 

"  free  from  average  unless  general,"  256,  267,  268. 

Great  Western  Ins.  Co.  v.  Fogarty,  660. 

effect  of  stranding,  256,  258-261. 
MILITARY  SERVICE, 

warranty  not  to  engage  in,  594. 
MILLS,  WORKING  OF,  149. 

clause  for  insurance  of  use  and  occupancy,  692,  603. 
MISCONDUCT, 

See  Contbaot;  Loss;  Wabbaittt. 


Index.  641 

[The  references  are  to  p&gM.] 

MISREPRESENTATION, 

See  Repbebentation. 
MISSING  SHIP,  11,  23a 
MONEY, 

not  covered  by  ordinary  Are  policy,  686. 

insurable  as  goods,  marine,  225. 

passage  money  how  insured,  226. 
MORTGAGE, 

whether  disclosure  of,  need  be  volunteered,  68,  166. 

before  foreclosure,  Is  not  an  alienation,  165,  157. 

whether  it  is  a  change  of  interest,  158,  160. 

is  an  alteration  in  ownership,  156,  158. 

Is  an  incumbrance,  161. 

warranty  in  respect  to,  must  be  fulfilled,  63,  161. 

Smith  t.  Agricultural  Ins.  Co.,  471. 

See  Chattel  Mobtoaqk. 
MORTGAGOR  AND  MORTGAGEE, 

have  an  insurable  interest,  35. 

Interest  of  each  separate,  146. 

mortgagee  may  enforce  policy  for  his  benefit  though  other  secnrity  la 
ample,  33,  175. 

subrogation,  33,  41,  175,  176. 

measure  of  recovery  by,  39. 

If  mortgagee  is  s  mere  payee,  be  takes  subject  to  any  defenses  ag&iiut 
the  mortgagor,  174. 
and  is  not  the  insured,  174. 
but  may  join  with  mortgagor  in  suit,  317. 

the  mortgagee  clause  creates  a  new  contract,  174,  176. 

which  must  make  the  proofs  of  loss,  176. 

form  of  mortgagee  clause,  588. 
MORTUARY  TABLES,  16,  17. 
MUTUAL  COMPANIES, 

nature  of,  3,  4. 

assessments  in,  4,  206. 

company  must  make  assessment  In  good  faith  to  meet  loss,  4. 

mutual  plan  more  successful  in  marine  and  life,  4- 

certificate  or  policy  evidences  both  the  contract  and  membership,  20. 

reference  to  the  form  of  a  certificate  and  by-laws,  20. 

by-laws  binding  upon  members,  80,  194. 

waiver  by  representatives  of  companies,  80,  395. 

Kausal  v.  Minn.  Farmers'  Mut.  Fire  Ins.  Asso.,  395. 

designation  or  change  of  beneficiary,  198,  199. 

special  regulations  of,  must  be  attached  to  the  New  York  standard 
policy,  588. 
MUTUAL  MISTAKE, 

reformation  of  contract  for,  50,  365,  383. 

N 

NAME  OF  INSURED, 

must  be  name  or  description  of  the  insured,  47,  48,  220,  221. 
"for  whom  it  may  concern,"  138,  139. 

41 


042  Index. 

[The  references  are  to  pages.] 

HAME  OP  INSURED— confirmed. 

general  descriptions  include  only  those  persons  who  were  within  th« 
contemplation  of  the  parties,  138,  139. 

Allen  enemies  cannot  be  insured,  220,  221. 
ITKCESSITY, 

no  excuse  for  breach  of  warranty,  64,  65. 

Justifies  a  deviation,  marine,  110. 
NEGLIGENCE, 

contributory,  no  defense,  29,  80,  105,  241. 

Smith  V.  Scott,  269. 

special  clauses  of  the  policy  In  regard  to,  prevail,  80. 

tt  Is  negligence  for  the  insured  not  to  read  his  application,  97,  408. 

nnseaworthiness  caused  by  negligence  is  a  defense,  103-108. 

party  guilty  of,  may  not  claim  the  benefit  of  general  average,  123. 

Insured  must  use  reasonable  means  to  save  property,  167. 

Tolnntary  exposure  to  unnecessary  danger,  217,  218. 

Burkhard  ».  Travelers'  Ins.  Co.,  528. 

use  of  due  diligence  for  personal  safety,  218. 

Tattle  V.  Travelers'  Ins.  Co.,  526. 

loss  caused  proximately  by  miscondact  or  negligence  of  Insured,  not 
covered,  252. 
careless  handling  of  cargo,  bad  stowage,  articles  placed,  in  insecort 
situations,  252. 
NEUTRALITY, 

warranty  of,  implies  requisite  documents,  108. 
NEW  FOR  OLD, 

See  DKDUcmoHS. 
NITRO-GLYCERINE, 

forbidden  by  fire  policy,  686. 
NON-FORFEITABLE  POLICY, 

form  of  contract  provisions  in,  212,  697,  696. 

non-forfeiture  statutes,  571,  680. 
NORTHAMPTON  TABLE,  17. 
NOTICE, 

life  policy  generally  assignable  on,  43,  211,  212. 

of  abandonment,  115,  116. 

of  cancellation,  173,  174. 

statutes  in  regard  to  notice  of  cancellation,  674. 

of  loss,  177-179. 

"  Immediate  notice,"  178. 

statutes  in  regard  to  notice  of  loss,  674 

of  assessment,  206. 

notice  to  agent,  notice  to  principal. 

See  AeBKT. 
NOTICE  OP  ABANDONMENT, 

See  ABAsnoKwan. 

o 

"  OBVIOUS  RISK,"  217,  218. 
OCCUPANCY,  164-ie7. 

See  Vaoasot. 


Index.  648 

[The  references  are  x>  pages.] 

OCCUPATION, 

statements  as  to,  203,  215. 
exception  of  hazardous,  216,  216. 
means  not  incidental  act  but  regular  calling,  21d. 
OFFICERS, 

powers  of,  21. 

of  stock  companies,  power  to  waive,  79,  04,  196,  206. 
of  mutual  companies,  power  to  waive,  80,  196. 
Couch  V.  City  Fire  Ins.  Co.,  377. 
OPEN  POLICY,  19,  118,  119. 
OPINION, 

misstatements  of,  not  generally  fatal,  60. 

statements  and  warranties  as  to  habits  are  fact  and  not  opinion,  208. 

Thomson  v.  Weems,  339. 

statements  and  warranties  as  to  health,  whether  fact  or  opinion,  844, 

846. 
expressions  of,  to  be  distinguished  from  misstatements  of  fact,  401. 
Cobb  V.  Covenant  Mut.  Ben.  Asso.,  491. 
statements  true  to  best  of  knowledge  or  beUef,  491. 
ORAL  EVIDENCE, 

See  Eyisbncb. 
ORAL  INSURANCE, 
is  valid,  47,  49.  307. 
ORIGIN  OF  INSURANCE  AND  INSURANCE  LAW,  6-8. 
ORIGINAL  DEFECT,  246,  251. 
OTHER  INSURANCE, 

other  or  double  insurance  defined,  31,  146. 
must  be  disclosed  if  called  for,  146-149,  201,  202. 
over  estimate  of  amount  of,  may  be  fatal,  60. 
"valid  or  invalid,"  147,  148. 
Landers  v.  Watertown  Fire  Ins.  Co.,  450. 
means  other  reinsurance,  when,  188. 
rules  as  to  contribution,  fire,  31,  183-187,  603,  604. 
rules  as  to  contribution,  marine,  253-255. 
charter  provision  prohibiting,  cannot  be  waived,  877. 
Couch  V.  City  Fire  Ins.  Co.,  377. 

examples  of  contribution  between  co-insurers,  603,  604. 
"OUTWARD  AND  VISIBLE  MEANS,"  216.  507. 
OVER-INSURANCE, 

an  encouragement  to  arson  and  fraud,  146,  379. 
OVERVALUATION, 

must  be  intentional  to  avoid,  144. 
Behrens  v.  Germania  Fire  Ins.  Co.,  479. 
when  for  court  and  when  for  jury,  143-145. 

contract  may  be  good  between  the  parties  though  the  4nilt  prescribed 
by  the  charter  be  exceeded,  78,  79. 
OWNERSHIP, 

the  policy  does  not  pass  with  a  change  of  ownership,  42. 
Rayner  v.  Preston,  276. 

of  policy,  where  premium  is  paid  with  embezzled  funds,  44. 
interest  of  Uie  insured  must  be  truly  stated  in  the  policy,  142,  148, 


844  Index. 

[Tlie  references  are  to  pages.] 

OWXERSHIP— continued. 

if  interest  is  other  tlian  unconditional  and  sole  ownenhlp,  IfiS,  1S4 
giving  a  chattel  mortgage,  effect  of,  154,  165. 
giving  a  real  estate  mortgage,  effect  of,  155. 
alienation  or  change  of  interest,  156-161. 

P 

PAROL, 

See  Contract;  EvtDEiroK. 
PARTICULAR  AVERAGE, 

definition  of,  257,  262. 

distinguished  from  general  average,  121. 

distinguished  from  particular  charges,  262,  267. 

percentages  of,  how  composed,  257. 

distinguished  from  salvage  loss,  262. 

repairs  to  ship,  248-250,  263. 

deductions  new  for  old,  120. 

exception  of  first  voyage,  120, 

In  relation  to  wear  and  tear,  244-246. 

In  relation  to  original  defect,  246. 

Bea  damage  and  ordinary  deterioration  combined,  247. 

liability  under  sue  and  labor  clause  is  not,  252. 

measure  of  indemnity,  118. 

value  of  interest  fixed  in  valued  policy,  118. 

valuation  apportioned  if  only  part  exposed  to  risk,  118. 

loss  under  an  open  policy,  118,  119. 

limitation  of  underwriters'  liability,  250-252. 

"free  from  average  unless  general,"  "  free  from  partlcnlar  average, 
"  total  loss  only,"  256-258. 

Great  Western  Ins.  Co.  v.  Fogarty,  560. 

"  total  loss,"  includes  constructive  total  loss,  257. 

total  loss  of  part  of  cargo,  258. 

as  affected  by  average  clauses,  258. 

adjustment  of,  248-250,  263. 
PARTIES  TO  THE  CONTRACT, 

insurers  are  generally  corporations,  8. 

an  alien  enemy  cannot  be  insured,  220,  221. 
PARTNERSHIP, 

insurable  interest  of  partners,  35,  86. 

one  partner  may  insure  for  all,  36. 

whether  shifting  of  interest  among  members  of,  avoids  the>poUqr>  IBQi 
160. 

new  member  admitted  to,  avoids  policy,  160. 
PASSAGE  MONEY,  225. 
PASSENGER  FITTINGS, 

whether  covered  by  policy  on  ship,  224. 
f  ERILS  INSURED  AGAINST, 

the  principal,  enumerated,  1. 

Ore,  135. 

Scripture  v.  Lowell  Mutual  Fire  Ins.  Co.,  489. 

death  and  accidental  injuries,  213. 


Indbx.  M5 

[The  references  are  to  p»ge».J 

PERILS  INSURED  AGAINST— continued. 

Bacon  v.  U.  S.  Mut.  Ace.  Abso..  614. 

of  the  seas,  231-234 

Are,  234. 

war  risks,  235. 

arrest,  etc.,  237. 

barratry,  238. 

Jettison,  239. 

all  other  perils,  240. 

Thames  &  Mersey  Mar.  Ins.  Co.  v.  Hamilton,  648. 
See  Loss. 
PERMIT, 

oflScers'  authority  to  give,  94,  196. 

under  fire  policy,  must  be  in  writing,  102,  196,  688. 

soliciting  life  agents  no  authority  to  grant,  95,  210, 211. 

as  to  travel  or  residence,  203,  204. 

to  keep  gunpowder  does  not  authorize  manufacture,  465. 
PETROLEUM, 

forbidden  except,  163,  585. 

trivial  quantities,  not  prohibited,  163,  164 

use  of,  whether  an  increase  of  risk,  452. 

Williams  v.  People's  Fire  Ins.  Co.,  462. 
PHARYNGITIS, 

whether  a  disease,  200. 
PICTURES, 

not  covered  by  ordinary  fire  policy,  68fl. 
PIRATES, 

rovers  and  thieves  distinguished  from  men-of-war  and  enemlca,  280L 
PLACE, 

representations  as  to  place  of  loading,  69. 

the  designated  location  is  generally  an  essential  element  of  the  flra 
policy,  137,  138. 

Lyons  v.  Providence  Washington  Ins.  Co.,  447. 

sometimes  held  otherwise,  138. 

reason  given  for  the  exception,  138. 

special  provision  of  the  New  York  standard  policy,  187. 

may  be  waived,  172,  173. 

of  residence  and  travel,  warranty  as  to,  208. 
PLACE  OF  CONTRACT,  64. 
PLATE  GLASS, 

insurance  of,  2. 

loss  on,  averaged  in  fire  policy,  680. 
PNEUMONIA, 

whether  a  disease,  200. 
POISON,  213,  216,  216. 
POLICY, 

oldest  form  of,  extant,  6. 

origin  of  Lloyd's  policy,  9,  10. 

kinds  of,  open,  valued,  running,  floating,  blanket,  time,  voyage,  temii 
Joint-life,  survivorship,  endowment,  tontine,  semi-tontine,  18-SOl 

statutes  requiring  valued  policies,  573,  574 


C46  Index. 

[The  references  are  to  pagee.1 

POLICY— continued. 

•tandard  fire  policies,  133,  134. 

statutes  providing  standard  Are  policies,  673. 

form  of  New  York  standard,  584-588. 

clauses  of  and  decisions  relating  to  New  York  and  Massachusetts  stand 

ard  forms,  133-196. 
lllastrative  leading  cases,  439-485. 
standard  forms  of  other  states,  138. 
requisites  of  a  valid  policy,  47,  48. 
roles  of  construction  of,  50-54. 
what  law  governs,  64. 
who  construes,  court  or  jury,  6& 
application  a  part  of,  169,  199. 
parol  contract  presupposes,  49. 
cancellation  of,  173,  674. 
assignment  of,  42,  43,  161,  211. 
form  of  life  policy,  596. 
decisions  relating  to  life  policy,  197-212. 
illustrative  leading  cases,  486-613. 
form  of  accident  policy,  598. 
decisions  relating  to  accident  policy,  21^218. 
illustrative  leading  cases,  614-534. 
form  of  marine  policy,  600. 
decisions  relating  to,  219-263. 
Illustrative  leading  cases,  635-666. 

See  Contbaot;  Loss;  Wabbahtt. 
PORT, 

risk  at,  222. 

Parmeter  v.  Cousins,  685. 
PORT  OF  REFUGE, 

expenses  at,  125,  126,  128, 129. 
POSSESSION, 

generally  means  right  to  possession,  161. 

change  of,  avoids  policy,  166. 
PREJUDICE,  LOSS  BY,  261. 
PREMIUM, 

a  contribution  levied  upon  the  many,  1. 

usually  paid  in  cash  or  by  notes,  4. 

amount  of,  how  calculated,  16-17. 

gross  or  oflElce  premium  and  net  premium,  17. 

reserve,  17,  18. 

payment  of,  generally  a  condition  precedent  in  life  insurance,  23. 

credit  for,  often  given  in  fire  and  marine,  24,  26,  499. 

payment  of,  with  embezzled  funds,  44. 

payment  of,  a  condition  of  the  continuance  of  the  contract,  45. 

acceptance  of,  is  a  waiver  of  known  grounds  of  forfeiture,  81,  206. 

delivery  of  policy  waives  prepayment  of,  95. 

agent  no  implied  authority  to  accept  anything  but  cash,  96. 

payment  of,  not  generally  a  condition  precedent  in  fire  and  marine,  101 

jtipaations  and  premium  form  the  consideration,  134,  136,  199. 

when  -eturnable,  42,  134,  136. 


Index.  647 

[The  references  are  to  pages.] 

P'BXMIVM— continued. 

If  risk  fails  to  attach  to  the  property  or  to  any  seveiable  part  thereof 
the  premium  thereon  Is  returnable,  266. 

Tyrie  t.  Fletcher,  265. 

if  contract  is  void  for  fraud  of  insured  the  premiiun  is  not  returnable,  42. 

notes  generally  a  lien,  135. 

unearned,  returnable  on  cancellation,  178. 

payment  of,  life,  205,  206. 

punctuality  essential,  205. 

when  payment  may  be  by  check,  206. 

Inability  to  pay,  no  excuse,  64,  66,  206. 

whether  war  suspends  obligation  to  pay,  65. 

assessments,  206. 

officers  of  company  may  waive  forfeiture  for  non-payment,  94,  206. 

promise  given  before  the  contract  that  insured  need  not  pay,  createi 
no  estoppel,  81. 

anthorlty  of  agents  to  waive  or  extend  payment  of,  66, 101,  210. 

Critchett  v.  American  Ins.  Co.,  495. 

retention  of,  a  waiver  of  known  forfeiture,  206. 

statutes  relieving  from  forfeiture  for  non-payment  of,  580. 

statutes  providing  for  return  of  unearned,  575. 

statutes  forbidding  combinations  of  foreign  companies  to  govern  rates 
582. 
PRESS  OF  SAIL, 

damage  by,  whether  general  average,  128. 

whether  particular  average,  244,  245,  250. 
PBKSUMPTION. 

See  EviDEiroK. 
PEOFITS, 

loss  of  prospective,  too  remote,  29. 

may  be  expressly  insured,  29. 

measure  of  indemnity,  118. 

loss  of,  presumed  from  loss  of  property,  118. 
PROOFS  OF  LOSS, 

requirements  of  policies  in  respect  to,  fire,  587. 

requirements  of  policies  in  respect  to,  life,  597. 

requirements  of  policies  in  respect  to,  accident,  599. 

requirements  of  policies  in  respect  to,  marine,  601. 

the  insured  must  make  the  proof,  fire,  179,  686,  687. 

a  mortgagee  if  simply  a  payee  is  not  the  insured,  174 
and  cannot  make  the  proofs  of  loss,  176. 
Connecticut  statute  gives  relief  to  mortgagee,  574. 

under  mortgagee  clause  mortgagee  may  make  proofs,  176. 

famishing,  is  a  condition  precedent,  178,  179. 

must  furnish  within  specified  time,  178. 

soliciting  agent  no  authority  to  waive,  102, 

silence  is  no  waiver,  82,  83. 

loss  of  policy  no  excuse  for  not  serving,  179. 

"Immediate  notice"  and  "forthwith,"  mean  what,  178* 

mailing  preliminary  notice  held  sufficient,  178. 

satisfactory  proof,  means  what,  178. 


648  Indkx. 

Lihe  references  are  to  pages.] 

PROOFS  OF  luOiiS -continued. 

no  obligation  to  produce  proofs  destroyed  by  fire,  180. 

whether  warranty  is  satisfied  may  be  for  court,  178. 

proofs  by  agent,  179. 

technical  objections  to,  are  waived  unless  specified,  83,  85,  179. 

whether  demanding  proofs  of  loss  constitutes  a  waiver  of  forfeitoi^ 
83,  84, 

If  company  denies  all  liability,  Insured  need  not  furnish,  83. 

whether  taking  part  in  adjustment  constitutes  a  waiver  of  forfeiture, 
84,85. 

agent  to  adjust  loss  has  no  authority  to  waive  a  forfeiture,  102. 

plans  and  specifications  if  required  must  be  furnished,  179,  180. 

also  magistrate's  certificate,  179. 

also  duplicate  bills,  if  possible,  180. 

personal  examination  of  insured  under  oath,  180,  181. 

Insured  need  answer  only  pertinent  questions,  181. 

suflBciency  of  examination  whether  for  court  or  jury,  181. 

appraisal  and  arbitration,  181-183. 

Vermont  statute  as  to  appraisal,  574. 

enforcing  contract  provisions  in  respect  to,  no  waiver  of  forfeiture,  188. 

misstatements  in,  when  fatal,  143-145. 

Chapman  v.  Pole,  475. 

overvaluations  to  avoid  policy  must  be  intentional,  144,  145. 

Behrens  v.  Germania  Fire  Ins.  Co.,  479. 

what  amount  of  overvaluation  will  talce  the  case  from  the  jury,  144, 
145. 

misstatements  in,  amount  to  perjury,  145. 

insured  not  concluded  by  statements  of  other  persons  in  his,  489,  490. 

statutes  in  regard  to  notice  of  loss  and  magistrate's  certificates,  674. 

form  of,  fire,  593. 
PROPERTY  INSURED, 

under  fire  policy,  136,  137. 

under  marine  policy,  223,  224. 

policy  does  not  pass  with  the  title  to,  42. 

sale  or  change  of  interest  in,  avoids  the  policy,  42,  156-161. 

fluctuating  stock  in  a  store,  158,  159. 

under  an  open  or  floating  policy,  19,  590,  591, 

declarations  under  open  or  floating  policy,  226- 
PRO  RATA  CLAUSE, 

See  Otheb  Insubanck. 
PROSPECTUS, 

Is  not  admissible  to  contradict  policy,  60. 
PROXIMATE  CAUSE, 

See  Cause. 
PUMPS, 

damage  to,  by  use  uot  allowed  under  marine  policy,  250. 

R 

ttANSOM, 

covered  by  policy,  235,  236. 
allowed  in  general  average,  126. 


Index.  d49 

[The  reforences  are  to  pages.] 

RATS,  241.  252. 

damage  by,  to  spare  sails,  648. 
REBUILDING, 

clause  providing  for,  fire,  140. 

election  to  rebuild  once  made  is  final,  141. 

election  to  rebuild  makes  new  contract,  141. 

measure  of  damages  upon  default  in,  141. 

Jury  decides  upon  reasonable  performance,  141. 

clause  has  no  application  to  mortgagee  policy,  141 
RECITALS, 

as  to  agency,  whether  conclosiTe,  90. 
RECOVERY, 

See  Loss. 
REFORMATION,  60,  366,  883. 
REINSTATEMENT, 

See  RxBnizj>nr«. 
REINSURANCE, 

object  of,  20. 

what  it  is,  187. 

.lability  of  reinsurer,  187. 

method  of  procuring,  187. 

a  new  contract,  187. 

misrepresentation  or  concealment  vitiates,  187. 

not  within  Statute  of  Frauds,  187. 

Is  an  indemnity  against  liability,  187. 

If  the  original  insured  becomes  insolvent,  187,  188. 

other  insurance  means  other  reinsurance,  188. 

no  privity  between  reinsurer  and  original  insured,  188. 

changes  in  risk  by  consent  of  original  insurer,  188. 

costs  of  suit  by  original  insured,  189. 

appraisal  clause  and  time  limit  to  sue  do  not  apply  to,  189. 
RELATIONSHIP, 

insurable  interest  as  founded  upon,  37. 

warranty  as  to,  202. 

warranty  that  insured  was  married,  202. 
RELINQUISHMENT, 

See  Waivkb. 
REMEDIES, 

in  case  of  double  insurance,  whether  insured  must  sue  one  company 
or  all,  .31,  183,  254. 

whether  insurer  when  subrogated  can  sue  in  his  own  name,  32, 189,  190. 

▼endee  of  the  property  cannot  sue  vendor  as  trustee  for  money  collected 
under  vendor's  policy,  42,  276. 

action  of  assumpsit  upon  the  contract  is  the  usual  form  of  remedy 
against  an  insurer,  69,  558. 

reformation  is  granted  in  equity  for  mutual  mistake,  or  for  mistake 
on  one  side  and  fraud  on  the  other,  50,  365. 

rescission  and  reinstatement,  allowed  for  fraud  or  mutual  mistake,  60, 
61. 

If  the  risk  does  not  attach  at  all  or  fails  to  attach  to  any  separable  part 
of  the  property,  the  premium  tliercfor  may  be  recovered  back.  In  an 
action  on  the  case,  42,  265. 


660  Index. 

[The  references  are  to  pages.] 

REMEDIES— con«nwed. 
Tyrle  v.  Fletcher,  266. 

if  the  contract  is  void  for  fraud  by  the  insured  the  premium  is  not  re- 
turnable, 42. 
waiver  or  estoppel  may  be  established  in  an  action  upon  the  policy,  69. 
After  the  insurer  elects  to  rebuild  or  repair,  action  is  upon  the  building 

contract,  141. 
the  original  insured  cannot  sue  the  reinsurer,  188. 
the  insured  can  sue  either  the  insurer  or  the  wrongdoer,  189. 
whether  right  of  action  is  suspended  by  war,  65. 
whether  equity  can  grant  relief  where  it  is  impossible  for  the  insured 

to  serve  proofs  of  loss,  179. 
the  person  entitled  to  the  beneficial  interest  may  sue  on  the  policy,  197. 
action  can  be  brought  only  within  the  period  limited  by  the  policy, 

193,  699. 
mortgagor  and  mortgagee  may  join  in  the  action  upon  the  mortgagor's 

policy,  317. 
Wlnne  v.  Niagara  Fire  Ins.  Co.,  314. 

action  may  be  brought  upon  parol  contract  or  binding  slip,  295,  801. 
action  upon  parol  contract  or  binding  slip  is  subject  to  any  defenses 

arising  under  terms  of  usual  policy,  49. 
Lipman  v.  Niagara  Fire  Ins.  Co.,  801. 
REMOTE  CAUSE, 

See  Causk. 
REMOVAL  OF  PROPERTY, 

takes  it  out  of  the  operation  of  the  policy,  137,  188, 148. 
property  is  not  protected  in  transit,  137. 
Is  protected  in  old  place  until  removed,  187. 
removal  to  a  place  of  safety,  177,  686. 
RENEWAL. 

clause  providing  for,  172,  173. 
short  receipt  of,  why  used,  172. 
may  be  by  parol,  172. 
constitutes  a  new  contract,  172. 
terms  of,  must  be  definitely  settled,  178. 
RENTS  AND  PROFITS, 

are  Insurable,  29,  36,  40. 
REPAIRS, 

under  rebuilding  clause,  140-142. 
by  mechanics  for  more  than  fifteen  davs,  152,  168. 
to  ship,  244,  246,  249,  250. 

whether  necessitated  by  wear  and  tear  oi  sea  damage .  244,  240. 
advertisement  for,  263. 
temporary  repairs  to  ship,  131,  437. 

cost  of,  the  limit  of  liability  in  New  York  standard  fire  policy,  684 
property  held  for,  not  covered  by  ordinary  fire  policy,  686. 
REPRESENTATION, 
What  it  Is,  69. 

must  be  substantially  complied  with,  59. 
misrepresentation  of  material  facts  avoids  policy,  821. 
rul*  at  to,  more  strict  fn  marine,  60. 


Index.  861 

[The  references  are  to  pages.] 

RMPRESENTATION— continued. 

expressions  of  belief  to  be  distinguished  from  statements  of  fact,  401. 

Cobb  r.  Covenant  Mut.  Ben.  Asso.,  461. 

misstatement  of  matter  of  opinion  not  generally  fatal,  60,  61. 

Thomson  ».  Weems,  339. 

test  of  materiality,  61. 

is  to  be  referred  to  time  of  closing  the  contract,  61. 

materiality  of,  for  Jury,  62. 

distinguished  from  warranty,  62. 

M  to  place  of  loading,  69. 

as  to  sailing  with  convoy,  69. 

as  to  date  of  sailing,  60. 

as  to  armament,  60. 

statutes  providing  that  mlsrepresentationB  shall  not  avoid  unleas  m^ 
terial,  671. 

ai  to  present  use  of  the  property,  66,  66. 

equivocal,  66,  321. 

statements  construed  to  be,  rather  than  a  warranty,  320,  321. 

Phoenix  Life  Ins.  Co.  v.  Raddlu,  318. 

fraudulent,  vitiates  the  contract,  143-146. 

statements  in  application  generally  made  warranties,  169,  19V. 

Statements  as  to  title  and  interest,  142,  143,  163,  166. 

statements  as  to  value  of  the  property,  144,  146. 

statements  as  to  other  insurance,  60,  146,  201. 

statements  as  to  incumbrances,  161,  47S. 

statements  as  to  vacancy,  164. 

statements  as  to  surroundings,  873,  874 

statements  as  to  health  or  disease,  199. 

statements  as  to  medical  attendance,  201. 

statements  as  to  age,  202,  211. 

statements  as  to  family  relationship,  202. 

statements  as  to  habits,  202. 

statements  as  to  occupation,  208. 

statements  as  to  residence,  203. 

statements  as  to  bodily  injuries,  204. 

by  relnsored,  187. 

See  Wabbaktt. 
fiESCISSION, 

when  allowed,  60,  61. 

why  this  form  of  relief  is  generally  unsatisfactory,  II 
RESERVE,  17,  18. 
RESHIPPING  EXF2CNSES, 

when  allowed  in  general  arerage,  129. 
RESIDENCE, 

representations  as  to,  203. 

abroad,  permit  for,  203,  204. 

restrictions  upon,  203. 
RESTRAINT  OF  PRINCES,  237,  238,  ' 

RETURN  OF  PREMIUM. 

See  PBBMrmi. 


66S  Index. 

[The  references  are  to  pages.] 

REVIVAL  OF  CONTRACT, 

waiver  of  forfeiture  operates  as,  67,  68,  69  71,  72,  81,  186 
RIDERS,  18,  262. 

RIGGING,  DAMAGES  TO,  232,  245. 
RIOTS,  167. 
RISE, 

difTorent  kinds  of,  1,  2. 

classification  of,  14-16. 

where  none  attaches  preminm  retnniAble,  42. 

Tyrie  e.  Fletcher,  266. 

■nspension  of,  89. 

Increase  of,  8,  150-162. 

Williams  V.  People's  Fire  Ins.  Co.,  452. 

what  it  includes,  fire,  135,  136,  439. 

what  it  includes,  life,  199-209. 

what  it  includes,  accident,  213-218. 

what  it  includes,  marine,  219,  220,  231-241,  54S. 

place,  when  material  to,  137. 

commencement  of  marine,  226. 

Parmeter  c.  Cousins,  636. 

termination  of  marine,  227. 

Lldgett  V.  Secretan,  538. 

fall  of  building,  when  terminates,  167,  585. 
See  Lobs. 
RUNNING  DOWN  CLAUSE, 

See  CoLUSiOK  Claum. 
RUPTURE, 

warranty  as  to,  200,  845. 

excepted  in  accident  policy,  600. 

8 

SACRIFICE, 

in  general  average,  121,  123,  124, 127. 
SAILS,  LOSS  OF, 

whether  allowable  in  general  average,  128. 

whether  allowable  in  particular  average,  232,  S44,  246,  960l 

damage  to  spare  sails  by  rats,  648. 
SALE, 

See  AuKHATio*. 
SALVAGE  CHARGES,  126. 
SALVAGE  LOSS,  262. 
SEAL, 

parol  contract  of  insurance  Is  binding,  49,  807. 

contract  need  not  be  under  seal,  372. 

statutes  providing  that  corporate  seal  is  not  required,  67lL 
SEAWORTHINESS,  WARRANTY  OF, 

Implied  in  voyage  policies,  103,  104. 

whether  implied  in  time  policies,  104-106. 

what  it  imports,  106-108. 

Dixon  V.  Sadler,  415. 

igiw>ranc»  does  not  excuse  breach,  107. 


Index.  <68 

[The  references  are  to  pag««.j 

8K A. WORTHINESS,  WARRANTY  OF— conttntt«<l. 
AB  against  owners  of  cargo,  107. 

does  not  extend  to  lighters,  107. 

DO  warranty  that  cargo  is  seaworthy,  1Q7> 

standard  of,  is  not  uniform,  107. 
SEIZURE,  236,  237. 
SELECTED  CASES, 

See  LxADnre  Casbs. 
SETTLED  LIMITS,  203. 
SETTLEMENT, 

final  unless  procured  by  fraud,  263. 
SEVERABLE  CONTRACT,  67,  142. 

New  York  standard  policy  not  severable,  142,  478. 

Smith  V.  Agricultural  lus.  Co.,  473. 
SHERIFF, 

has  insurable  interest,  86. 
SHIP, 

policy  on,  covers  what,  224. 

mistake  in  name  of,  when  fatal,  220. 

mutual  mistake  in  name  of,  4S. 

policy  on,  generally  valued,  18. 

value  of,  under  an  open  policy,  118-120. 
SHIP  OR  SHIPS, 

consignments  by,  226. 

usage  as  to  declarations,  220. 
SHIPMASTER, 

name  of,  in  policy,  226. 

change  of,  225. 

barratry  by,  238. 

duty  of,  to  act  for  the  common  interest,  122,  138,  4811 

duty  to  take  instructions  if  possible,  120. 
SICKNESS, 

SeeHxAi.TB. 
SILENCE, 

not  a  waiver,  82. 
SLIPS, 

insurance  sometimes  closed  by,  26,  801. 

Thompson  v.  Adams,  295. 

are  not  valid  marine  contracts  in  England,  3& 

admissible  in  evidence,  when,  26. 

osual  policy  imderstood  to  follow,  49. 

subject  to  terms  of  usual  policy,  49. 

Lipman  v.  Niagara  Fire  Ins.  Co.,  801. 
SMOKE, 

damage  by,  is  by  fire,  447. 
SMOKING, 

represented  not  to  be  allowed  on  premises,  06. 
SMUGGLING,  111. 
SPITTING  BLOOD,  200. 
SPONTAincOUS  COMBUSTION,  180,  284,  Sft. 


tft>4  Index. 

[The  references  are  to  pacM.J 

SPRAIN, 

accident  by,  213. 
8PRKAD  OP  FIRE, 

whether  loss  by,  is  proximate,  191> 
STANDARD  FIRE  POLICY, 

object  of,  133. 

list  of  states  which  Iiave  adopted,  678. 

form  of  New  Yorli,  684-^88. 

by  whom  prepared,  133. 

does  not  change  the  pre-existing  rules  of  constraction,  63,  64. 

consideration  of  the  clauses  of  the  New  York  and  Massachosetti  formf 
of,  134-196. 

what  states  have  followed  the  New  York  form,  138. 
STATEMENTS, 

See  Repbbbkntation. 
STATUTES, 

relating  to  the  business  of  insurance,  4,  &. 

creating  an  insurance  department,  4,  &. 
object  of,  6. 

tie  patrol,  6. 

are  binding  upon  foreign  companies,  6. 

rained  policy,  18. 

•gainst  wagering,  28. 

of  frauds,  not  applicable  to  insurance  contract,  49. 

of  frauds,  not  applicable  to  contract  of  reinsurance,  187. 

standard  Are  policies  established  by,  133. 

classified  lists  of,  affecting  contract,  669-683. 
STEAM, 

loss  by,  136. 
STOCK  COMPANIES,  8. 
STOCK  IN  TRADE, 

what  included  in,  61,  62,  136, 137. 

Harper  v.  New  York  City  Ins.  Co.,  808. 
STOCKHOLDER, 

insurable  interest  of,  85. 
STORAGE, 

defined,  168. 

permission  to  keep  gnnpowder  does  not  aathorlM  mannfaetare,  466 
STOWAGE, 

as  it  affects  seaworthiness,  106. 

when  bad  stowage  is  the  proximate  cause  of  loss,  262. 

of  goods  on  deck,  124,  262,  261. 
STRANDING, 

grounding  is  a  sea  peril,  238. 

what  constitutes,  258-261. 

"  free  from  average  unless  the  ship  be  stranded,"  268. 

Toluntary,  whether  a  general  average  act,  126 

Star  of  Hope,  428. 
9UB-AGENTS, 

powerr  of,  76,  \(tt. 


Index.  666 

[The  references  are  to  pagM.) 

SUBJECT  MATTER, 

a  requisite  of  the  contract,  47,  48. 

what  are  insurable  interests,  S3-S8. 

of  fire  insurance,  136,  137. 

description  of,  how  constraed,  51, 16S,  164,  809. 

location  of,  material,  137. 

of  marine  insurance,  223,  224. 

new,  cannot  be  substituted  by  walTer  or  estoppel,  70. 

Landers  v.  Cooper,  385. 

See  Clauses  of  thk  Poiiioiss;  Contbaot. 
SUBROGATION, 

rule  of,  stated  by  U.  8.  Supreme  Court,  31,  82. 

effect  of  compromise  or  release  by  the  insured  in  favor  of  wrong 
doer,  32. 

payment  by  wrong-doer  to  the  Insured  abates  policy  pro  tanto,  32. 

mortgagor  and  mortgagee,  33,  176,  191. 

none  in  case  of  felony  or  loss  of  life,  88. 

insured  has  option  between  two  forms  of  remedy,  189. 

under  clause  of  the  fire  policy,  189-191. 

proximate  loss  from  spread  of  fire,  191-193. 

u  affected  by  stipulations  in  a  bill  of  lading,  32,  33,  190,  191. 

whether  insurers  of  lessor  are  subrogated  to  right  of  latter  againit 
lessee  to  compel  repairs,  191. 

whether  insurers  of  vendor  are  subrogated  to  right  of  latter  to  unpaid 
purchase  price  under  executory  contract  of  sale,  40-41,  176,  176. 

Castellain  v.  Preston,  282. 

doctrine  of  last  case  criticised,  40-41, 176,  176,  294* 

payment  by  gift  gives  no  right  of,  286. 
SUCCESSION  BY  DEATH, 

whether  a  change  of  interest,  167. 
SUE  AND  LABOR  CLAUSE,  119,  220,  252. 
SUICIDE, 

effect  of,  irrespective  of  special  provision,  207. 

what  is,  within  meaning  of  the  policy,  207. 

wha't  degree  of  insanity  will  take  the  case  out  of  the  exemption ,  W7, 
208. 

raises  no  presumption  of  insanity,  209. 

*' suicide,  sane  or  insane,"  209. 

**  suicide,  voluntary  or  otherwise,"  209 

presumption  against,  209. 

Mallory  v.  Travelers  Ins.  Co.,  604. 

Missom-i  statute  regarding,  581. 
SUIT,  LIMITATION  OF  TIME  FOR, 

under  fire  policy,  193. 

under  accident  policy,  699. 
SUNSTROKE, 

whether  a  serious  disease,  iOQi 

not  an  accident,  214 
SURETY, 

has  insurable  interest,  35,  86- 


65€  Index. 

[The  references  are  to  pagM.1 

SURRENDER  VALUE, 

of  a  life  policy,  18. 
SURROUNDINGS, 

Applicant  must  fairly  disclose,  68,  69. 

changes  in,  whether  an  increase  of  risk,  150-162. 

building  warranted  "detached  one  hundred  fe«t,"  860. 

Burleigh  v.  Gebhard  Fire  Ins.  Co.,  850. 

representations  as  to,  873,  874. 
SURVEY, 

purpose  of,  16,  16. 

made  a  warranty,  160. 

T 

TAXES, 

imposition  of,  does  not  constitute  breach  of  warranty  against  ineaa» 
brances,  161. 
TEMPORARY  REPAIRS, 

when  allowable  in  general  average,  131,  437. 
TEST  OF  SOLVENCY, 

of  an  insurance  company,  17,  18. 
THEFT, 

may  be  loss  by  fire,  136. 

loss  by,  usually  excluded  by  a  special  clause  of  fire  policy,  167. 

loss  by,  under  marine  policy,  236,  237. 

loss  by,  narrower  construction  of  the  word  in  England,  236. 
TIME  OF  SAILING, 

representations  as  to,  material,  69,  60. 

representations  as  to,  when  matter  of  opinion,  61. 
TIME  POLICY, 

what  is,  19. 

whether  implied  warranty  of  seaworthiness  in,  103-106. 

whether  deviation  suspends  or  avoids,  110. 
TITLE, 

not  essential  to  an  insurable  interest,  34. 

insurance  does  not  run  with  title  to  the  property,  42. 

Rayner  v.  Preston,  276. 

unless  inquiry  is  made,  particulars  about  the  title  need  not  be  ^olon 
teered,  58. 

form  of  fire  policy  itself  makes  inquiry,  58,  584,  585. 

information  asked  for,  presumed  to  be  all  that  is  required,  68. 

property  "lield  in  trust,"  138. 

"for  whom  it  may  concern,"  138,  139. 

Interest  of  insured  must  be  truly  stated  in  the  policy,  142,  143. 

character  of  insurable  interest  must  be  disclosed,  142. 

but  not  circumstances  relating  to  value  or  permanency  of  interest,  143 

part  owner,  incumbrances,  contract  to  sell,  property  seized  on  execa 
tion,  143. 

word  "  interest,"  in  standard  policy  as  substitute  for  "  title  and  pot 
session,"  143. 

"as  his  interest  may  appear,"  143. 

"onconditiona'  «nd  sole  ownership,"  meaning  of  the  clause,  168. 


Index.  667 

[The  references  are  to  pftgee.] 

TJTLR—iMniinued, 

**  tme  title  and  interest,"  153. 

building  on  leased  ground,  1&^ 

chattel  mortgage,  154. 

If  foreclosure  proceedings  be  commenced,  155. 

alienation  clause,  "  change  in  interest,  title  or  possession,"  meanlBg 
and  effect  of,  156-161. 

Incumbrances  are  not  change  of,  157. 

contract  to  sell  is  not  sale,  157. 

bankrupt  or  insolvent  assignments,  157 

death  of  insured,  devise  by  will,  157. 

floating  stock  of  goods,  158. 

shifting  of  Interest  among  partners  or  joint  ownars,  109,  lOOi 

Walton  t.  Agricultural  Ins.  Ck>.,  462. 

introduction  of  new  interest,  160. 

partition  a  change  of  title,  160. 

after  loss  interest  may  be  transferred,  160, 101. 

forfeiture  for  incumbrances,  161. 

Smith  V.  Agricultural  Ins.  Co.,  471. 

possession  under  alienation  clause  means  right  to  possaatloti,  16L 

construction  of  clause  is  for  the  court,  161. 
TONSILITIS,  200. 
TONTINE  POLICY,  2a 

does  not  give  right  to  demand  aoooonting,  46. 
TORNADO, 

loss  by,  2. 
TORT, 

negligent  or  criminal  destiiiction  by  third  persons  no  defense  to  ininrti, 
20,136. 

fraud  or  misconduct  by  insured  Is  a  good  defense  to  the  insnrsr,  (N^ 
143,  144,  207,  220,  239,  241,  251,  252. 

insured  may  sue  either  tort-feasor,  or  insurer,  180. 

insurer  is  subrogated  to  rights  against  tort-feasor,  81-83,  189-101. 

Insurer  is  responsible  for  his  agent's,  88. 

barratrous  acts  of  master  or  crew  are  insnred  against,  138. 
TOTAL  DISABLLITT,  216. 
TOTAL  LOSS, 

definition  of,  112. 

when  it  is  actual,  112. 

Great  Western  Ins.  Co.  v.  Pogarty,  500. 

when  constructive,  113,  114. 

of  part  of  subject  insured  is  particular  aTezag«,  267. 

clause  limiting  the  risk  to  a,  256-258. 

"total  loss  only,"  includes  constructive  total  loss,  267. 

marginal  clause  overrides  general  form  of  policy,  52. 
"TOUCH  AND  STAY,"  223,  230. 
TRAVELING, 

restrictions  upon,  203. 

permit  for,  203. 

by  public  or  private  conveyance,  218. 

Norttirup  v.  Railway  Pass.  Assur.  Co.,  582. 

42 


668  h'DEx. 

[The  references  are  to  pmgM.] 

TRUST, 

rel&tlon  of,  is  not  eatabUshed  between  Losttred  aad  Insnran,  tfk 
property  held  In  trust,  188. 

u 

ULTRA  VIBSa, 

corporation  mast  not  act,  7& 
UNDERWRITER, 

marine  insurer,  why  called,  10. 

now  generally  a  corporation,  S. 

often  gives  credit  to  broker,  26. 

limitation  of  liability  of,  250-262. 
"UNLESS  GENERAL,"  266,  267. 
UNSEAWORTHINESS, 

See  SsAwoBTHnms. 
U8AOB, 

of  Lloyd's,  & 

early  decisions  founded  upon,  8. 

trade  usage,  when  admissible  in  evidence,  AS,  68. 

as  explaining  ambignous  words,  187. 

usage  as  to  deck  load  in  general  average,  124,  126. 

usage  as  to  deck  load  in  particular  average,  224,  240,  261. 

loss  by  voluntary  stranding,  not  general  average  by  English  OMMgi,  tH^ 
484. 

as  explaining  the  subject  of  insurance,  168,  164. 
USE  OF  PROPERTY, 

whether  an  increase  of  risk,  160-162. 

rule  In  respect  to,  464. 
USURPED  POWER,  167. 

V 

VACANCY, 

statement  as  to  present  condition  is  no  warranty  of  continuance,  66,  Mk 
need  not  be  stated  unless  inquiry  is  made  or  policy  requires  It,  166. 
Is  not  necessarily  an  Increase  of  risk,  166. 
meaning  and  effect  of  the  clause  in  New  York  and  Massachusetts  poiV 

cies,  164-166. 
distinction  between  "vacant"  and  "  unoccupied,"  166. 
question  of,  may  be  for  Jury,  166. 
Tlolatlon  of  the  clause  avoids,  167. 
permit  for,  liberally  construed,  167. 
waiver  of,  166. 
VALUATION, 

measure  of  recovery,  fire,  dS^-^L 

marine,  118. 

value  of  property  at  time  of  fire,  the  measure  of,  188,  liO. 

intentional  overvaluation  is  fatal,  144,  U5. 

restriction  of,  in  charter  and  by-laws,  78,  79. 

apportioned,  when,  118. 

how  computed  under  an  open  marine  policy,  JS.  119. 

for  contribution  in  genera)  average,  132, 


Index.  669 

[The  ref  ereace*  are  to  pac***] 
VALUKD  POUCY, 

defined,  18. 

eondnBlTe  nnloM  freodolent,  S7. 

lift  of  valued  policy  laws,  678,  874 
VENDEE, 

insurable  interest  of,  8&. 

when  title  passes  to,  84 

at  what  point  of  time,  oo^t  to  iBtoi%  tt,  Iff?. 

Bayner  0.  Preston,  S78. 
VENDOR, 

insurable  Interett  of,  8S. 

when  title  passes  Croa,  84 
VEBTIGO,  200. 
VESTED  INTEBBSTS, 

of  beneficiaries,  i8-45. 

exceptional  rule  in  Wisconsin,  44 

■tatutes  providing  for  change  of  benefldary,  6T7, 974 
VICE  PBOPBE, 

underwriter  not  liable  for  loss  by,  846,  851. 
VIOLATION  OF  LAW, 

implied  warranty  against  illegality,  110-111. 

•xception  of  death  or  injury  from,  in  life  and  aoddant  policies,  800, 
817. 

Murray  v.  New  York  Life  Lis.  Co.,  606. 

there  must  be  a  connection  between  the  act  CMumg  death  and  the 
violation  of  law,  609. 
VISIBLE  MARK, 

required  as  evidence  of  aoddeatal  tnjiiry,  S16. 
VOID, 

means  voidable,  67. 
VOLUNTARY  EXPOSURE  TO  UNNECESSABT  DAKGEB,  817,814 
VOLUNTARY  STRANDING, 

loss  by,  in  general  average,  186, 187« 

Star  of  Hope,  488. 
VOYAGE, 

how  described,  228,  884 

oommencement  of,  886. 

Farmeter  v.  Cousins,  684 

how  to  be  pursued,  824 

Williams  V.  Shee,  684 

termination  of,  227> 

Lidgett  V.  Secretan,  684 
VOYAGE,  FIRST,  180t 
VOYAGE  POLICY,  14 

w 

WAGER  POLICY,  88. 

WAGES  AND  MAINTENANCE  OP  CREW, 

during  detention,  not  chargeable  to  underwriters,  861. 

at  Port  of  Refuge  allowed  under  American  rule,  184 

when  allowed  in  general  average,  126, 180. 


900  Index. 

[The  references  are  to  pagM. ) 
WAGES  AND  MAINTENANCE  OF  CREW— continual 
mle  in  the  United  States,  126. 
SUr  of  Hope,  428. 
by  York  Antwerp  Rules,  129,  180. 
WAIVER  AND  ESTOPPEL,  20-26,  68-108. 

anthority  possessed  by  the  agents  of  Insurers,  20. 

authority  possessed  by  the  agents  of  life  companies,  21,  22,  I& 

authority  possessed  by  the  agents  of  fire  companies,  24,  25. 

authority  possessed  by  the  agents  of  marine  companiet,  S6i 

nature  of  waiver  and  estoppel,  68. 

distinction  between,  68. 

are  irrevocable,  67. 

what  constitutes,  69. 

Union  Mutual  Ins.  Co.  v.  WiUdnson,  864. 

BO  new  consideration  requisite,  68. 

may  be  shown,  in  action  on  the  policy,  00. 

may  be  established  by  parol,  69,  70. 

Plumb  V.  Cattaraugus  Ins.  Co.,  said  to  hATe  changed  the  Uw  for  New 

York,  70. 
if  inconsistent  with  ordinary  rule  of  evidence,  70. 
reasons  in  favor  of  the  doctrine  of,  71. 
reasons  opposed,  72. 
effect  of  the  doctrine  of,  in  practice,  78. 
thought  to  be  consonant  with  sound  law,  78. 
cause  of  divergent  opinions  in  applying,  78,  74. 
what  cannot  be  waived,  78. 
provisions  of  charter  and  by-laws,  78. 
CJouch  V.  City  Fire  Ins.  Co.,  377. 

any  forfeiture  or  contract  stipulation  may  be  the  tnbject  of,  7k 
new  subject  matter  cannot  be  substituted  by,  79. 
Landers  v.  Cooper,  385. 
parol  evidence  when  excluded  in  Massachnsetta  and  New  Jenay,  19, 

80. 
Dewees  v.  Manhattan  Ins.  Co.,  869. 
rnle  of,  in  the  case  of  mutual  companies,  80. 
Kausal  v.  Minnesota  Farmers  Mut  Fire  Ins.  Abso.,  898. 
what  amounts  to  a,  81. 

unless  ground  of  forfeiture  is  known  there  is  no,  81. 
oral  promise  before  the  contract  is  no  foundation  for,  81. 
Union  Mutual  Life  Ins.  Co.  tj.  Mowry,  381. 
antecedent  promise  that  credit  will  subsequently  be  given  la  not  UbA- 

Ing,  81. 
lubseqnent  promise  by  duly  authorized  agent  la  binding,  81. 
knowledge  of  breach,  when  a,  82. 
Van  Scholck  r.  Niagara  Fire  Ins.  Co.,  862. 

mere  knowledge  of  breach  without  confirmatory  act  intnfHdenV  8& 
silence  is  not,  82. 

technical  defects  in  proofs  of  loss,  88. 
denial  of  all  liability,  whether  a,  83. 
demanding  proofs  of  loss,  whether  a,  83. 
language  of  Titus  v.  Glens  Falls  Ins.  Co.  is  too  broad,  84. 


Tkdbx.  661 

[The  references  are  to  p&t^t.] 

ATAJVEK  AND  RSTOVPEL— continued. 

special  provisions  of  New  York  standard,  84,  S5. 

taking  part  in  adjustment,  wliether  a,  84. 

whether  grounds  of  defense  first  named  are  exclusive,  8ft. 

retention  of  proofs  of  loss  waives  what  defects,  85. 

can  only  be  efifected  by  one  having  authority,  49,  81,  86, 

general  principles  relating  to  agency,  86,  87. 

tendency  to  apply  a  special  rule  to  agents  of  insurers,  8(J. 

oatensible  authority  rather  than  actual  instructions,  87. 

undisclosed  instructions  not  binding,  88. 

•tlpalations  in  the  policy  as  to  who  are  and  who  are  not  agents,  8ft 

•eliciting  agent  shall  be  deemed  to  be  the  agent  of  the  assured,  80. 

no  one  an  agent  unless  duly  authorized  in  writing,  89. 

no  agent  authorized  to  make,  alter  or  discharge  contracts,  80. 

•uch  contract  stipulations  are  prima  facie  binding,  89. 

why  not  conclusively  binding,  89-92, 

Kausal  v.  Minnesota  Farmers'  Mut  Fire  Ins.  Asso.,  892. 

contract  stipulations  as  to  manner  of  waiving,  92. 

no  one  authority  to  waive  except  by  written  indorsement,  92. 

whether  the  contract  method  of  waiving  is  exclusive  or  may  itself  b« 

waived,  93. 
Massachusetts  role,  03. 
prevailing  rule,  93,  94. 
Messelbach  v.  Norman,  897. 

actual  authority  to  waive  may  be  shown  by  parol  though  Inconiistcnt 
,^       with  contract  stipulations,  94. 

Knickerbocker  Life  Ins.  Co.  v.  Norton,  800. 

authority  of  officers  to  waive,  94. 

authority  of  managers  to  waive,  96, 

canvassing  life  agents  are  special  agents,  05. 

authority  to  deliver  policy  implies  authority  to  decide  how  first  pra- 

minm  shall  be  paid,  96. 
effect  of  mistake  of  agent  in  filling  up  the  application,  96,  97,  389,  80i. 
no  estoppel  if  there  is  collusion  between  company's  agent  and  insured, 

06,  412. 
omission  by  the  insured  to  read  application  is  carelessness,  07. 
Ryan  t.  World  Mut.  Life  Ins.  Co.,  408. 
effect  of  erroneous  Interpretation  by  agent  of  questions  or  answera, 

07,98. 
special  restriction  upon  agents'  authority  to  Interpret,  98. 
whether  knowledge  by  agent  of  forfeiture  will  operate  as  an  estoppel, 

76,  77,  99,  100. 
mere  knowledge  of  forfeiture  without  an  act  of  ratification  nerei 

amounts  to  waiver,  82. 
effect  of  stipulations  in  the  application  restricting  the  agent's  author- 
ity, 76.  77,  98-101. 
authority  of  commissioned  fire  agents,  101, 

are  general  agents  unless  authority  is  specially  restricted,  K)l. 
have  authority  to  give  credit,  101. 
authority  of  special  agents  for  soliciting  only,  102. 
•athority  of  clerks  and  subagents,  75,  102. 


662  Index. 

[The  refer«nces  are  to  pages.] 

WAIVER  AND  ESTOVPEL— continued. 

effect  of  clause  In  New  York  standard  policy  as  to  who  are  agents  of 

company,  171. 
consent  or  waiver  by  insurer  whether  binding  upon  reinsurer,  188. 
effect  of  clause  that  no  representative  of  company  shall  have  powez  to 

waive  except  by  written  agreement  indorsed  on  policy,  ld4,  190. 
Walsh  r.  Hartford  Fire  Ins.  Co.,  480. 
charter  and  by-law  directions, 

waiver  allowed,  49,  78,  79. 

waiver  not  allowed,  877. 
condition  that  policy  must  be  conntenigned, 

waiver  allowed,  867. 
breach  of  warranty,  the  agent's  mistake, 

waiver  allowed,  06,  864,  889,  894. 

waiver  not  allowed,  97,  897. 
•gent's  knowledge  of  breach  or  consent  to  It, 

waiver  allowed,  99,  862. 

waiver  not  allowed,  76,  99,  480. 
Statements  of  application  warranted, 

waiver  allowed,  854,  898. 

waiver  not  allowed,  406. 
payment  of  premium, 

waiver  allowed,  205,  899,  484. 

waiver  not  allowed,  205,  881,  40S. 
warranty  against  other  insorance, 

waiver  allowed,  75. 

waiver  not  allowed,  76,  98,  877,  88S. 
warranty  against  other  life  insoranca) 

waiver  allowed,  318. 

waiver  not  allowed,  828. 
warranty  against  selling  liquors, 

waiver  not  allowed,  70. 
warranty  against  alienation  or  change  of  intersat, 

waiver  allowed  in  the  case  of 

Steen  v.  Niagara  Fire  Ins.  Ckx,  100,  notaw 

waiver  not  allowed,  159,  46S. 
warranty  against  vacancy, 

waiver  allowed,  166. 

waiver  not  allowed,  897,  480l 
location, 

waiver  allowed,  172, 178. 
warranty  against  incumbrances, 

waiver  allowed,  322. 

waiver  not  allowed,  822. 
warranty  as  to  title, 

waiver  allowed,  862. 
warranty  to  keep  watchman, 

waiver  not  allowed,  368. 
warranty  as  to  character  or  surroundings  of  the  proiMrtf, 

waiver  allowed,  373,  874. 

waiver  not  allowed,  800. 


Index.  $88 

[The  references  are  to  pa^^es.] 

WAIVER  AND  ESTOPPEL— continued. 

condition  that  directors  must  give  permits  for  non -residence, 
waiver  allowed,  100. 

warranty  as  to  age, 

waiver  allowed,  202. 

defects  in  proofs  of  loss, 
waiver  allowed,  83,  179. 
WALKING  OR  BEING  ON  ROADBED,  217,  628. 

Burkhard  v.  Travelers  Ins.  Co.,  628. 
WALLS,  FALLING,  167,  168. 
WAR,  66. 
WARRANTY, 

defined,  63. 

distinguished  from  representation,  62. 

must  appear  on  face  of  policy  somewhere,  on  body,  margin  or  foot.  6lL 

indorsement  on  the  baclc  is  not  sufficient,  62. 

itatements  of  application  or  other   papers  may  be  Incorponted  ani 
made  part  of  policy,  65. 

a  mere  reference  to  other  papers,  or  a  statement  that  the  oontraek  It 
based  upon  them  does  not  make  them  warranties,  66. 

Phoenix  Life  Ins.  Co.  t.  Raddin,  818. 

application  is  generally  made  a  part  of  the  contract  and  expressly  war- 
ranted, 169,  199. 

statutes  that  application  and  by-laws  most  be  annexed  or  set  forth  ta 
policy,  670,  671. 

no  particular  form  of  words  Is  necessary  to  create  a,  62. 

•yery  statement  of  fact  or  promise  of  performance  on  face  of  policy 
especially  marine  is  a,  66,  369. 

must  be  literally  fulfilled  regardless  of  materiality  or  intent,  62,  68. 

warranties  and  conditions  precedent  are  essentially  alike,  62,  134. 

statutes  making  breach  of,  depend  upon  materiality  or  bad  faith,  671- 

doctrine  de  minimis  non  curat  lex,  64. 

statement  of  present  use,  not  a  warranty  of  continuance,  66. 

expressions  of  t>elief  to  be  distinguished  from  statements  of  fact,  401. 

Cobb  V.  Covenant  Mut.  Ben.  Asso.,  491. 

statement  of  opinion  not  generally  a  warranty,  169. 

statement  of  habits  is  of  fact  and  not  opinion,  203. 

Thomson  ».  Weems,  339. 

inability  to  fulfill  is  no  excuse  for  breach  ef,  64,  65. 

sickness,  insanity,  death,  etc.,  66. 

modification  of  this  rule  in  respect  to  obligation  to  famish  prooCi  of 
loss,  64,  65, 178,  179,  180. 

no  obligation  to  furnish  proofs  destroyed  or  beyond  control,  180L 

whether  war  suspends  or  avoids  the  contract,  66. 

Massachusetts  statute  in  respect  to  war,  681. 

questions  of  application  unanswered  or  partially  answered,  eqniToeal 
answers,  66. 

Phoenix  Life  Ins.  Co.  e.  Raddin,  818. 

breach  of,  avoids  the  contract  though  not  connected  with  the  loss,  06. 

Williams  c.  People's  Fire  Ins.  Co.,  452. 

Whether  temporary  breach  of,  suspends  or  avoids,  67. 


604  Index. 

[The  references  are  to  pages.] 

WARR  AK  TY— continued. 

Kyte  p.  Commercial  Union  Assur.  Co.,  457. 

coarta  incline  to  construe  statements  as  representations  rather  than 
warranties,  169. 

•trict  construction  of,  against  insurer  in  favor  of  indemnity,  53,  360. 

rule  of  construction  is  not  clianged  by  the  adoption  of  statutory  stand- 
ard policies,  53. 

forfeitures  are  not  favored,  53. 

Wlnne  v.  Niagara  Fire  Ins.  Co.,  314. 

to  avoid  forfeiture,  contract  Is  sometimes  made  severable,  67. 
but  not  the  New  York  standard,  142. 

Smith  V.  Agricultural  Ins.  Co.,  473. 

■tatntes  relieving  from  certain  forfeitures,  671,  580,  581. 

provisions  and  stipulations  of  all  the  policies  are  warranties  and  In- 
surers promise  to  pay  only  on  condition  of  their  fulfillment,  134,  190, 
220. 

equipment  of  ship  warranted,  6S. 

date  of  sailing  warranted,  63. 

nationality  of  ship  warranted,  63,  872,  373. 

warranted  no  other  insurance  (see  below),  63,  75,  98. 

warranted  free  from  Incumbrances,  63. 

warranted  not  engaged  in  selling  liquor,  63,  76. 

warranted  to  be  used  for  the  storage  of  ice,  63. 

building  warranted  "detached  from,"  64. 

Burleigh  v.  Gebhard  Fire  Ins.  Co.,  350. 

smoking  not  allowed  on  the  premises,  66,  60. 

used  for  storage  of  spun  yarn,  66. 

hooM  warranted  to  be  of  stone,  66. 

house  warranted  to  be  a  dwelling,  66. 

building  warranted  to  be  a  grist-mill,  873. 

boilding  warranted  to  be  occupied  as  a  storehouse,  860. 

warranted  against  keeping  a  stable  or  other  hazardooa  use,  870^ 

location  an  essential  condition,  137. 

Lyons  v.  Providence  Washington  Ins.  Co.,  447. 

of  title  and  Interest,  142,  143. 

of  valuation,  143-145. 

Behrens  v.  Germania  Fire  Ins.  Co,  iT9. 

of  good  faith,  8,  56,  143. 

Chapman  c.  Pole,  475. 

of  no  other  insurance,  146,  201. 

of  no  other  insurance  "  valid  or  Invalid,"  148. 

Landers  v.  Watertown  Fire  Ins.  Co.,  460. 

of  operation  of  factories,  149. 

of  keeping  watchman,  149,  368,  418, 

ai^ainst  Increasing  the  risk,  150. 

Williams  V.  People's  Fire  Ins.  Co.,  462. 

of  use  of  premises,  152,  454. 

against  repairing  operations,  152. 

of  unconditional  and  sole  ownership,  lUL 

of  fee  simple,  154. 

ftfaiust  chattel  mortgase,  164. 


[ndex.  966 

[The  references  are  to  pafl^ec] 

WARRANTY— continued. 
Against  foreclosure,  155. 

against  alienation  or  ciian;;e  of  Interest,  title,  or  poeMsslon,  166k 
Walton  V.  Agricultural  Ins.  Co.,  462. 
Against  incumbrances,  161. 
Smith  r.  Agricultural  Ins.  Co.,  471. 
Against  assignment  of  policy,  161,  42. 
Against  keeping  certain  hazardous  articles,  16&. 
Against  vacancy,  164. 
of  the  existence  of  a  force  pump,  170. 
that  room  is  warmed  by  a  stove,  170. 
that  property  shall  be  protected  from  further  damage,  171. 
of  serTing  notice  and  proofs  of  loss,  177-181. 
of  submitting  to  examination  under  oath,  179. 
of  producing  books  of  account  and  furnishing  duplicAte  pApen,  180. 
of  submitting  to  appraisal  or  arbitration,  181. 
Vermont  statute  regarding  appraisal,  574. 
of  making  subrogation  assignment,  180. 
of  limlutlon  of  suit,  193. 
aa  to  health  or  disease,  199. 
Cushman  v.  U.  S.  Life  Ins.  Co.,  486. 
what  is  good  health,  or  disease,  199,  200. 
headache,  dyspepsia,  cold,  congestion  of  Ilvftr,  bronchitis,  ooosmnptkm, 

gout,  vertigo,  etc,  199,  200. 
dropsy,  343. 
rupture,  200,  346. 

AS  to  medical  attendance  and  treAtment,  SOI. 
Cobb  V.  Covenant  MnU  Bea.  Asso.,  491. 
AS  to  age,  202,  211. 
AS  to  family  relationship,  202. 
AS  to  habits,  202. 
Thomson  ».  Weems,  339. 
AS  to  occupation,  203. 
AS  to  residence  and  travel,  208. 
AS  to  bodily  injuries,  204. 
Union  Mut.  Ins.  Co.  «.  Wilkinson,  864. 
serious  injury  is  what,  204. 
■light  cut  is  not  a  wound,  204. 
character  of  the  injury  not  determined  by  the  ImprMsion  At  the  tlma, 

867. 
Union  Mut.  Ins.  Co.  v.  Wilkinson,  864. 
AS  to  payment  of  premium,  206. 
Critchett  o.  American  Ins.  Co.,  40Bb 
non-forfeiture  statutes,  680. 
suicide,  207. 

Mallory  r.  Travelers  Ins.  Co.,  604. 
Missouri  statute  regarding  suicide,  681. 
violation  of  law,  209. 
Murray  v.  New  York  Life  Ins.  Co.,  608. 
warranted  free  from  capture,  255,  266. 
WAFTAnted  free  from  capture  and  seizare,  664. 


99%  Index. 

[The  r^fereuceti  are  to  pages.] 

WAK.RK'STY—conttnui.d. 

"free  from  average  unless  general,"  266-268. 
warranted  not  to  abandon,  261,  601. 

"total  lo8B  only  "  or  warranted  free  from  particular  average,  JB7. 
Great  Western  Ins.  Co.  v.  Fogarty,  560. 

implied  warranties,  marine, 
origin  of,  8. 

■eawortliiness,  103-106. 
Dixon  c.  Sadler,  416. 
no  deviation,  108-110. 
Burgess  v.  Equitable  Marine  Ins.  Co.,  420. 
legality  of  adventure,  110-112. 
flee  Clauses  of  the  Policiks  ;  Coittbaot  ;  Waitxb  Airo  EsTomL 
WATCHMAN,  149,  160,  868,  418. 
WATER,  DAMAGE  BY, 

under  fire  policy,  186. 

under  marine  policy,  240, 

in  general  average,  124,  127. 
WEAR  AND  TEAR,  244-28a 

what  it  is,  244. 

Instances  of,  246. 

not  covered  by  policy,  219,  231,  S44 

Magnus  v.  Buttemer,  668. 

combined  with  sea  damage,  247-SS0l> 

not  a  general  average  loss,  122. 
WEARING  APPAREL, 

whether  location  of,  is  material,  188. 
WHALING, 

tackle  and  stores  not  part  of  ship,  9S4i. 
"WHOLLY  DESTROYED," 

meaning  of  plirase  under  valued  policy  laws,  explained  la 

Ampleman  v.  Citizens'  Ins.  Co.,  S8,  note. 
WIFE, 

insurable  interest  in  husband's  life,  87. 

wife's  policy  whether  assignable,  43. 

statutes  granting  protection  against  husband's  crediton,  QTft. 
WILFUL  EXPOSURE,  217. 
WORMS, 

damage  by,  241. 
WRECK,  REMOVAL  OP,  261. 
WRITING, 

contract  need  not  be  in,  49,  807. 

constitutes  the  best  evidence,  60,  807. 

prevails  over  printed  clauses,  61. 

Harper  v.  New  York  City  Ini.  Co.,  80& 

Y 

TORK  ANTWERP  BCLBS,  (1890),  137. 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    000  853  207    9 


